Law Offices of Jingting Li, PLLC
What is Short Sale?
A short sale is a sale of real estate property in which the money received from the short sale buyer will be less than the amount owed to the lender. The original buyer fails to carry on the commitment to repay the lender in full amount. Therefore, the lender(usually a bank or financial institution) agrees to accept a price lower than the amount remaining of the debt to prevent additional loss. Short sale agreements do not always mean the original borrowers will be free from their obligations to repay any shortfalls on the loans, unless specifically agreed by the lender.
Short sale as an alternative for default borrower and lender:
A short sale is an alternative to foreclosure as it prevents the lender from additional loss, and to free up the liability of the borrower to a great extent. However, both short sale and foreclosure usually result in a negative credit report against the property owner.
In order to apply for short sale, the borrower must prove that they have financial difficulty results in the failure of paying the remaining debt.
To qualify to purchase a short-sale properly, you need to have the cash offer to make the purchase. A plan to mortgage financing usually cannot satisfy the short-sale agreement.