What is a short sale?

My real estate agent suggests that we do a short sale of our property where we owe more on the loan than what the property is worth. How do you do a short sale?

Asked on June 29, 2012 under Real Estate Law, California


S.J.H., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

A short sale is when you sell the property for less than the total value of the mortgage(s) on the property. In order to do this , you must get the mortgage company or companies to accept less than the amount left on the mortgage. They then reduce the lien on the property in order for you to get clean title. Depending on the bank, you may or may not be responsible for any shortage after the closing but usually they allow you to wipe it out. There are special real estate brokers and attorneys who specialize in short sales. I suggest you consult one.

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