Definition
The sale of a property for less than the amount owed on the mortgage, typically used as a last resort to avoid foreclosure.
What to consider
- Be sure you understand local rules and regulations.
- Plan for fluctuations in occupancy and extra maintenance costs.
- Ensure you have proper insurance for short-term stays.
Real world scenarios
- With an underwater mortgage, Lindsey arranges a short sale to avoid foreclosure. She works closely with her lender to finalize terms.
- Kyle hopes to buy a home under short sale, offering slightly less than the mortgage balance, subject to lender approval.
- Though a short sale impacts credit, it’s often less damaging than a foreclosure, allowing owners like Teresa to regroup financially sooner.
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