A short sale can prevent a foreclosure and may reduce your chances of being sued by your lender over a delinquent mortgage. But do you understand the details of this foreclosure alternative? Take this quiz to find out!
What is a short sale?
Short sale is another name for foreclosure.
It's a home sale that takes place in just two weeks.
It's a transaction in which the bank lets a delinquent homeowner sell the home for less than what's owed.
When can you start to consider a short sale?
Any time, if you can make a strong case for one
Only if you already have a willing and able buyer lined up
Only after the bank has already declared your mortgage delinquent and started toward foreclosure
Can a short sale hurt your credit?
Only if the bank chooses to sue for the outstanding balance owed on the mortgage
Yes, but probably not as much as a foreclosure would hurt your credit
The bank will treat a short sale as fulfillment of the mortgage and won't mark the deficiency on your credit report.
How can you prove financial distress to your lender?
Show proof of a major life event (job loss, death of a spouse) that has damaged your earning ability.
Hire an attorney to make a compelling case to the bank on your behalf.
Obtain affidavits from friends and family about the stress you've been under due to your mortgage.
Who finds a buyer for a short sale?
Since the bank owns the property, it must find a buyer.
The homeowner must find a buyer, as in a normal real estate transaction.
The local sheriff will find a buyer through a public auction.
What's a fractional interest transfer?
A quick version of a short sale
A common alternative to short sale or foreclosure
An often fraudulent trick used by scammers to take homeowners' money and property
Does a short sale eliminate your debt to the lender?
Yes; the lender writes off the rest of the money owed as part of the short sale agreement.
No; the lender uses the money earned in the short sale to file a suit against you for the remainder owed.
While the short sale may eliminate much of your debt to the lender, you can still be sued for the remaining amount owed.
True or false: If you're not behind on mortgage payments yet but anticipate falling behind soon, you can begin the short sale process.
Can any real estate agent handle a short sale?
Yes, but it's smart to hire an agent who's familiar with a short sale's limits and requirements.
No; only a short sale-certified agent can handle a short sale.
All agents receive short sale training in their initial licensing classes.
Aside from helping out the homeowner, what's another benefit of a short sale?