what is a short sale and what is the steps in doing one

geeta2121 · Joined: 26 Nov 2007 Posts: 1 1.25 Dollars($)

what happens when your house value is less than what you owe the bank.

jenkin7 · Joined: 04 Jun 2007 Posts: 939 140.80 Dollars($)

Hello Geeta,

A short sale occurs when the loan against the property is greater than what the property is sold for. By this process you may be able to avoid foreclosure and you may settle with your lender to pay off the outstanding amount.

There are a few steps that you should follow before doing a short sale.

1. It is important to take the help of a real estate agent who will help you to verify the market value of your property. You may also consult an attorney if you are selling the property on your own.

2. Get an estimate of the closing costs that you are required to pay as the seller. The real estate agent or the attorney will help you to determine this.

3. Calculate the total amount you owe against your property and then determine the amount that will be left after paying from the proceeds of the sale.

4. Contact your lender and talk to him about the procedures he will follow for the short sale. Some lenders might reduce the outstanding balance and work out a repayment plan, while others might seek a deficiency judgement.

However, there are a few conditions mentioned here http://www.mortgagefit.com/pre-foreclosure.html under which you may qualify for a short sale before a foreclosure. You may have a look at it.

larry · Joined: 27 Jun 2007 Posts: 3328 473.51 Dollars($)

Hi Geeta,

Welcome to this forum.

Jenkin has given you very good information. I would just like to add that Short Sale is a pre-foreclosure sale. It is usually done to avoid foreclosure. Short Sale has much lesser negative affects than foreclosure. Short sale will drop your 80 to 100 points and foreclosure will drop 200 to 300 points and will be shown on your credit report for 10 long years.

Thanks,
Larry

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