What is a short sale?

A short sale is a real estate transaction in which the sales price of a property is less than the amount owed to the lender. In New York, this occurs when a homeowner is struggling to make their mortgage payments and their mortgage is already in default or close to being in default. This option becomes available when the homeowner cannot qualify for a refinancing or loan modification, or when they can no longer pay the full mortgage amount but they do not want to go through foreclosure. When it comes to a short sale, the lender agrees to accept the proceeds of the sale as full payment on the mortgage, even though it does not cover the full amount. The homeowner is able to avoid foreclosure, which would damage their credit more than a short sale. However, they are usually still responsible for any remaining debt after the sale. In order for a short sale to be approved, the homeowner must provide full disclosure of their financial information and they must prove that they are unable to pay the full amount due to a hardship. The lender must then approve the terms of the sale. This may be a lengthy process, so it is important to hire a real estate lawyer or attorney to help with the negotiation and paperwork.

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