Short Sale Definition

August 9, 2011

General Short Sale Info

So you’ve heard the term ‘short sale’ but you aren’t exatcly sure what a short sale consists of. Well we are happy to explain the short sale definition for you today. Short sale is a rel estate term for when the homeowners sells their home for a loss. This requires negotiating with your lender because they ultimately are the nes who have to sign off on the deal. You cannot sell in a short sale without your lenders permission.

The way the housing market is these days many people are opting to sell their homes in a short sale. The banks/lenders are allowing the homeowners to sell instead of taking on even more foreclosed properties. Normally your lender will only allow you to sell in a short sale if you are behind in your payments and facing foreclosure. You would also be required to write up a hardship letter explaining why you should be allowed to sell your home for a loss. We have a nice write up on writing a hardship letter here on our site if you need some help writing one.

While most who opt to sell in a short sale are already facing foreclosure this doesnt always have to be the case. This can also be used before you get into trouble if you are being proactive about yopur housing situation. This doesnt mean that you can just sell for a loss anytime you want, you would need to be on the path to trouble. You are just being more proactive than others who wait until they are facing foreclosure. An example would be if you lost your job with little prospects for a new one in the near future.

Right now is a great time to sell in a short sale since the government is forgiving all taxes owed on the amount of debt forgive. In brighter times you would be required to pay tax on any amount of debt your lender forgives. It’s always best to work with a short sales expert who knows how everything works. You don’t want to end up paying any money to your lender or paying more taxes than you should. It’s a bit more complicated than a normal real estate transaction.

We hope our short sale definition helps answer your questions. If you would like another take on the subject please visit wikipedia to read what they have to say.

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