A short sale is an agreement made between lender and borrower whereby the borrower will sell the property and the lender will accept the proceeds of the sale as full settlement of the outstanding balance due on the mortgage.
While this might sound like an impossibility to most people, short sales do occur frequently when a lender is desperate to minimize it’s losses on a defaulting borrower.
To help convince a bank to accepting a short sale, borrower should consider:
- Proving current financial hardship
- Showing real estate data that indicates depressing real estate values
- Presenting calculations showing how much the lender can expect to gain back should they accept a short sale
- Showing proof of serious buyers who are interested to buy the property
- Laying out income tax statements with a decreasing trend
No matter how unlikely it might seem that a lender could agree to a short sale, remember that they are businesses who would take serious steps to minimize losses.
As foreclosure is a lengthy and tiring process, cutting their losses with a less tedious process can be a very attractive proposition.