A short sale is one of the common alternatives used to avoid a foreclosure. It can be an advantage to a homeowner facing foreclosure and who desires to avoid having a foreclosure on a credit record. Short sales are exactly what the term sounds like. When a home is sold for less than what is owed on it the difference between the amount the home sells for and the mortgage loan amount on the home is called a short sale. Thus, if a home's mortgage amount is $400,000 but is sold in a short sale for $200,000 the amount short is $200,000.Getting approval from a lender involves a process of filling out certain documentation and submitting it to the bank or lender's loss mitigation department for consideration and approval of the short sale. It is the bank that has the final say over whether the short sale is approved rather than the homeowner who is selling the property.
The first decision that should be made by a homeowner considering a short sale is whether a short sale is the best solution? If the homeowner simply wants to walk away from the home a deed in lieu of foreclosure may work better. The homeowner simply deeds the property back to the bank. In many cases the bank, in return for a deed in lieu of foreclosure, will pay the homeowner money called "cash for keys". This process allows the bank to avoid substantial fees and costs that would be involved in a foreclosure and provides the homeowner with money that can be used to assist with moving expenses or to begin to rebuild a financial standing. Follow the guidelines below in order to obtain the best results, if a short sale is determined to be the best solution in resolving a foreclosure problem.