What’s a short sale in real estate?

In real estate, a short sale occurs when a homeowner sells their home for less than they owe on the mortgage. This often happens when the homeowner is in a difficult financial situation and can’t keep up with payments.

A short sale isn’t the same as a foreclosure. In a foreclosure, the lender forcibly repossesses the property and then tries to sell it for enough to recover its costs. In a short sale, the homeowner voluntarily chooses to sell the property and then gives the lender all the proceeds. The lender can then either forgive the difference or get a deficiency judgment, which requires the homeowner to pay what’s left over.

Homeowners may decide that a short sale is right for them for various reasons. For example, a short sale does less damage to your credit score than a foreclosure. If you want another mortgage, you may have a much shorter time to wait after a short sale than after a foreclosure.

Moreover, a short sale allows you to stay in your home until the sale is completed, whereas a foreclosure forces you to vacate immediately. It also allows you to retain the dignity of knowing you sold your home.

If you’re having money trouble, contact a financial professional in your area to help you get back on track.