A short sale in real estate is one in which a house is sold for a price that is less than the amount still owed on the mortgage. It is up to the mortgage lender to approve a short sale. Sometimes the difference between the sale price and the mortgage amount is forgiven by the lender, but not always.

What is a short sale intended to do?

Short sellers aim to sell shares while the price is high, and then buy them later after the price has dropped. Short sales are typically executed by investors who think the price of the stock being sold will decrease in the short term (such as a few months).

What do you need to know about a short sale?

All information regarding the seller’s finances and the home’s value will need to be gathered and presented to the lender along with other items in a packet, as well as having a prospective buyer. A short sale means that the lender has agreed to sell the property for less than the outstanding mortgage balance against it.

What’s the difference between a short sale and foreclosure?

A short sale enables homeowners to stay in the home until the sale is completed. A foreclosure forces homeowners to vacate. While a seller typically pays all real estate agent commissions and other closing costs, in a short sale the seller pays nothing; the lender or bank foots the bill.

Do you still owe money on a short sale?

If the amount the mortgage company receives from the sale is less than the mortgage debt owed, depending on state laws, the homeowner may have a deficiency judgment. In other words, the now-former homeowner may still owe money on the home loan. Foreclosures are less common than short sales.

Can a seller reject a short sale offer?

Even if a seller has already been approved by their lender for a short sale, there is no guarantee that the lender will accept your offer. They may believe your offer is too low. If this is the case, the lender may counter your offer, flat out reject your offer or they may not even respond to it.