What Is a Short Sale?


A short sale, sometimes called a pre-foreclosure sale, is pretty much what it sounds like: You sell your house for an amount short of what you still owe on the mortgage. It is a fairly common tactic for homeowners facing foreclosure who cannot catch up on past-due mortgage payments and can’t afford their homes anymore even if they could catch up. It is a means of avoiding foreclosure that can help a homeowner avoid the negative credit-rating impacts that foreclosure entails.

  • Homeowners in financial distress might want to consider a short sale if:
  • You can no longer afford to make the mortgage payments, possibly due to financial difficulties
  • You have fallen behind on your mortgage payments
  • You are not eligible to refinance your mortgage or obtain a mortgage modification from your lender
  • You are underwater—that is, your home is not worth what you still owe on your mortgage
  • You have not been able to sell your home at a price that covers what you still owe on your mortgage.
  • How Can a Short Sale Help Me?

You must get your mortgage lender to approve a short sale. Ideally, your lender will accept the proceeds of the sale as payment in full, even though the amount will be less than you still owe on your mortgage. Otherwise, you still will owe your mortgage lender the remaining amount but be without your house. Your mortgage lender may impose conditions for accepting the short sale proceeds as payment of the mortgage, including requiring you to pay an additional amount above the proceeds of the short sale.

Why would a mortgage lender accept less than it is owed? The bank saves the time, effort, and expense of repossessing the house and reselling in in foreclosure. Depending upon many factors, including how many foreclosures your lender has in process, repossession of the house and a foreclosure sale can take more than a year, during which time the homeowner facing foreclosure will probably not make mortgage payments. Furthermore, after foreclosure, the lender may need to repair and maintain the house to attract a buyer, a potentially expensive proposition. Legal fees can add tens of thousands to the cost to the lender. By allowing a short sale, the lender often winds up saving money versus the costs of foreclosure.

The obvious benefits for the short-selling homeowner are avoiding foreclosure and the accompanying negative credit impact as well as avoiding bankruptcy, an all-too-frequent occurrence for homeowners in financial distress.

If You Are Contemplating a Short Sale to Avoid Foreclosure in Salt Lake City, Call Jory L. Trease of JLT Law to Discuss Your Options

If are behind on your mortgage payments and are considering allowing the house to go into foreclosure in Salt Lake City, call Jory Trease to discuss your options. A short sale might make more sense for your particular situation. Take advantage of a free case evaluation to determine if an attorney can help you. JLT Law can help. Contact me at (801) 896-9444 or through my online contact form.