What is a short sale? Five things you need to know.

By , Contributor

4. Are you qualified for a short sale?

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    In this 2009 file photo, Claudia Escobar (left) mends the shoes of her son Tommy Deantonio at their home in Clifton, Va. The family was faced with foreclosure after Ms. Escobar lost her job. Losing a job is a common way to show legitimate hardship, which could pave the way for a short sale rather than foreclosure.
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One reason homeowners resist short sales is because they don’t understand if they qualify for the process. Though each short sale is unique, homeowners generally must show legitimate hardship. Common reasons include: death, divorce, loss of job, relocation, etc. Anytime a property is inevitably headed towards foreclosure, a borrower qualifies for a short sale.

Short sales are a way to mitigate the lender's loss. They're not a consumer bailout. Nevertheless, the consumer participating in a short sale will more than likely be able to walk away from all his debt and start over.

If you should happen to find yourself underwater, owing more on your home than the home is worth, find a proper real estate agent who is knowledgeable about short sales and has a proven track record. They are different than the average transaction, and it is important that you do your own research.

 

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