A short sale occurs when a lender or mortgage company agrees to accept less money than the outstanding mortgage to satisfy a debt. Short sales can be beneficial for both parties in a mortgage since it is typically in the interest of the property owner and the lender to avoid foreclosure.
Since a lender will receive less money than the outstanding loan amount in a short sale, many prospective clients wonder why lenders would agree to short sales. The answer is that lenders will usually lose more money in the foreclosure process than they would lose in a short sale.
Lenders do not like managing and owning foreclosed property, which can be costly. Short sales usually save lenders and property owners time and money. In order to complete a short sale, the property owner must take the following steps:
- Contact an attorney to gather and draft documents to submit to the mortgage company.
- Contact a realtor to find a buyer for the property at the current market price.
- The realtor must find a bona fide purchaser for the property at the current market price.
- Submit the short sale offer and purchase agreement to the lender.
Short sales are generally more complicated and time-consuming than the average real estate sale. If you are considering a short sale or another option for saving your home from foreclosure, it is in your best interest to hire an experienced bankruptcy lawyer to guide you through the process.
This article should not be taken as legal advice. If you’re considering a short sale, foreclosure, or another legal option, you need to consult an attorney for guidance. If you’re in New Jersey and seeking legal assistance, we can help you.
Brenner Spiller & Archer is a New Jersey law firm that is dedicated to helping families find relief from the burden of debt and other financial woes. For more than 35 years, our bankruptcy lawyers have provided effective guidance on all debt relief matters to clients throughout Central and South Jersey.