how does a short sale work? - Zillow Real Estate Advice

By definition - a short sale occurs?when a homeowner sells their home for less than they owe due to market values falling short of a full payoff on their outstanding mortgage loan balance. The transaction must be negotiated with all lien holders?- not simply a mortgage holder, but perhaps an HOA, a tax lien or even?personal lien/judgment. All lien holders must relinquish their interest in the property and agree to settle for less than the full balance owed to them - hence the sale is "short" of a full pay off.

Contrary to popular opinion, it is not necessary to be behind in your mortgage payments for your lender/lienholders to consider short sale negotiations, although special circumstances like divorce, loss of job/income, relocation, death of family member, etc. are qualifying events that are?needed for consideration.

If you are a homeowner - Are you considering a short sale? or Do you know of someone that is?

If you are a buyer - Short sales often take longer than traditional sales to close because of the time necessary to negotiate between lienholders. It is best to determine if the sellers' hardship is verifiable and if their initial short sale financial package has been submitted/reviewed in order to gauge the likelihood that the short sale will be granted and approximately how long you may need to be in limbo before you can purchase the property.

Either way, it is best to be represented by an agent experienced?with and successful in negotiating short sales before you sell or consider buying.

Source: http://www.zillow.com/advice-thread/how-does-a-short-sale-work/470453/

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