A Short Sale is the sale of a home when sale proceeds do not fully pay off the existing loan and the lender accepts a discounted payoff to completely satisfy the loan. This is also known as the homeowner being in an upside down position on the loan.

As you consider the option of a Short Sale, remember that mortgage lenders are willing to work with borrowers faced with financial hardship and to accept a discounted payoff on a mortgage as the lenders are looking to limit any potential loss on your loan. If you are faced with a hardship that makes it likely for you not to be able to meet your obligation on your mortgage, the possibility is very real that your lender would prefer to settle the matter with you as opposed to taking the property through the foreclosure process. Remember that most of the time your lender wants to work with you.

A Short Sale is a cooperative negotiated settlement with its completion mutually agreed upon by both the homeowner and the lender. A Short Sale takes approximately 400 days to come to a successful close and there is no deficiency judgment at its completion. A foreclosure, in Florida, takes on the average about 500 days to complete. The foreclosure process is stopped when the short sale is closed or completed. The impact on the credit report of a seller is much less severe for a short sale than a foreclosure; about two years as opposed to about seven years for a foreclosure deficiency judgment. A foreclosure is a far less amicable way of settling the problem. The foreclosure process results in a court order dictating that the home sell at public auction, which is conducted by the Florida county Sheriff’s department in which the home is located. It may result, if necessary, having the Sheriff’s deputies physically remove the belongings and the homeowners from the property. A Short Sale and a foreclosure can be and are usually concurrent in their timing. Although a successful Short Sale which results in a closing of a property will stop the foreclosure process and the judge involved, will dismiss the proceedings.

In most cases, the homeowners or borrowers pay no sales costs if a lender approves a Short Sale. All title and escrow fees, commissions involved in the selling of a home may be paid by the lender as part of the Short Sale process.

Hardships which a lender may consider legitimate could be any of these but not limited to; job loss or significant income loss, family illness or injury, divorce, job relocation when there is deficient equity in the home.

Some lenders will accept a Short Sale on loans that are not delinquent; others will not accept the file until the loan is delinquent. Each and every lender is different in their requirements and not all Short Sales are approved.

It is important to work with a real estate professional who can guide you through the process and to be in contact with the lender.

A Short Sale is a mutually agreed upon process by the lender and owner of the home, it is not adversarial and leaves the homeowner more financially sound and frees the homeowner from an upside down mortgage. It is a far less damaging solution to the problem than a foreclosure.