Short sale
A sale for less than the mortgage owed, with the lender's approval to write off the difference. Takes months of paperwork, and there's no guarantee of approval.
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Part 1 of 4
Why a seller cares
When the home is worth less than the loan, a short sale asks the lender to accept less and release the lien. It takes months, the lender approves the price and the terms, and the approval letter decides whether the shortfall follows you.
Part 2 of 4
A simple example
You owe $265,000 on a home worth $230,000. A buyer offers $230,000, the package goes to the lender, and the approval arrives eleven weeks later.
| The step | What it takes |
|---|---|
| The hardship package | Financials, a letter, the listing and the offer |
| The lender's review | Weeks to months, with a BPO to check the price |
| The approval letter | The terms, the deadline, and whether the deficiency is waived |
A short sale is a sale with a lender's approval on top. The letter is the whole deal.
Part 3 of 4
What people get wrong
That the lender has to take a reasonable offer. They can decline any offer, and the buyer has to be willing to wait.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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