Short Sales

What is a Short Sale?
A “short sale” (also known as a “short payoff” or “pre-foreclosure sale”) occurs when the net proceeds of the sale are less than what is owed on the property.   It occurs when a lender[1] agrees to accept less than it is owed to permit a sale of the property which secures its note[2] as an alternative to foreclosure.  Once the lender receives the agreed upon amount, they will release the lien on the property.  Whether the seller/borrower will be liable for any deficiency will need to be negotiated.  Terms of short sales will vary from lender to lender.  A short sale may have tax and/or legal ramifications.  Before agreeing to a short sale, the seller/borrower should understand the terms of the lender.

[1] The term lender includes holder of the note, loan servicer, investor, and private or public mortgage insurance company.

[2] There may be more than one note and/or lender.