What is a short sale?
Short sale is a badly-known option also called real estate short pay-off or pre-foreclosure. It is an agreement between a lender and a borrower about the sale of a property to a third party. Basically, it is when the lender accepts to sell the property for an amount that is less than the amount owed by the borrower. It happens when the home value has fallen down and it cannot be sold for the mortgage amount owed. The short sale specialist will negotiate with the lender to sell the home for whatever the market is willing to offer. The bank will get the proceeds and discharge the remaining debt.
Who is eligible for a short sale?
Short sales occur when homeowners can’t afford their mortgage payments any longer. They need to prove that they are unable to continue making them. Most frequent examples of hardship include a drop in home value, a divorce, an illness, a loss of job.
What are the negative effects of a short sale?
A short sale has some negative effects as it reduces your credit rating. However it avoids getting a “debt discharged due to foreclosure” mention on your credit report which would reduce your credit score by 250 points at least. The short sale does reduce your credit score as well, but only by 100 points or less.
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