What is a Short Sale and Why Does it Take so Long

A short sale sounds like it should be an easy, quick fix to your mortgage problems. However, that’s not necessarily how it works. The idea is to offer you an alternative to the process of bankruptcy and foreclosure. Neither of those options is very suitable for most people so the arrangements that create things like short sales might be a better alternative to such drastic actions.

Basically, this type of sale has nothing to do with how long it takes to sell your home or property. It is called a short sale because the sale produces funds that falls short of the actual value of the home. This is a method of paying off the lender in a time efficient manner. Of course, this also means that the lender has to be willing to make a legal arrangement that releases you from the remainder of the payment.

Of course, why would your lender find it acceptable for you to pay less than is owed on your home? This arrangement is typically saved for homeowners entering foreclosure. It is in the lender’s best interest to make the closest thing they can to a profit on the sale of the home.  Foreclosure often means that the lender doesn’t really receive the funds until after the lender liquidates the house. This can be a very long process.

For a short sale the liquidation happens very quickly in cohesion with the rest of the options. For the lender this can mean closing the file much earlier than later and separating fully from the home owner. Of course, this arrangement with the lender works out better for the home owner. Maintaining a high interest loan that bleeds the bank account dry just can’t be done.

So why does a short sale take so long? In most cases the longest period of time is waiting for the approval from the lender. While you already understand what happened and how your budget got so far off track your lender needs to review the facts and determine what to do next. If you have had a fairly clean payment records and you are not typically in financial crisis then there is good chance that you will qualify. Once you have qualified the process becomes a simple function of discovering what you actually have, what you need, and how you are willing to come through the process in search of a better way to get things done.


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