What is a short sale in a foreclosure?

A short sale in a foreclosure is a sale of a property by a homeowner that is worth less than the amount owed. In a short sale, the lender agrees to accept less than the amount they are owed on the loan and the difference is “forgiven.” This can be an attractive option because it keeps the foreclosure off of the homeowner’s record and prevents a long process associated with a traditional foreclosure. In California, short sale properties are usually sold through a short sale lender and a real estate agent. The short sale lender will review the homeowner’s financials to determine the amount of debt that can be forgiven. The real estate agent will work with the homeowner to list the property and find a buyer. If the lender agrees to the terms of the sale, the buyer and the seller will sign a contract and the sale will be completed. The lender will then pay off the remaining debt on the property and the homeowner will no longer be liable for any additional costs associated with the loan. Short sales can be beneficial for homeowners who are facing foreclosure in California because they are generally quicker and less expensive than traditional foreclosure proceedings. However, depending on the situation, it is important to understand your rights and responsibilities under California law for a short sale before signing any contracts.

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What is a short sale in a foreclosure?

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