Money Matters: Selling Short
by Staff
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.

  • True
  • False

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?

  • Short sales can benefit the housing market.
  • Short sales offer deals to real estate investors.
  • Both