What is a short sale?

A short sale in real estate law in Virginia is a process of selling a home for less than the outstanding balance owed on its mortgage. The home can be sold to the lender or to a third-party buyer. Short sales are used when a homeowner cannot make payments on their mortgage and the home is facing foreclosure. In order for a short sale to take place, the homeowner must be able to demonstrate a financial hardship such as a job loss, death of a family member, or medical bills that are too expensive. The homeowner must also have reached an agreement with their lender that they will not pursue a deficiency judgment, which is a lawsuit that holds the homeowner liable for any amount of money the bank was not able to recoup from the short sale. The lender must give their approval for the short sale which will involve bringing in an independent real estate broker to assess the value of the home and make a recommendation on the sales price. Once the lender approves the terms of the short sale, the buyer will be presented with a purchase agreement and all the paperwork that is required to close the sale. The sale must be approved by all parties before the transfer of the title can take place.

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