Short sales occur when a property is sold for less than the amount owed. The transaction is called a “short sale” because the proceeds of the sale are short of the full payoff. Short sales release your liability to the property.
Avoiding foreclosure with a short sale has many benefits.
When you go into foreclosure, it is usually because you haven’t been making payments on your mortgage. Short sales usually take some time since you have to prepare them, list them, find a buyer, get bank approval, and close the transaction. This can add up to months in which you get to live in your home without having to make your mortgage payment. This period can be an excellent opportunity to build up a rainy day fund so that you can stay out of financial trouble in the future.
When you do a short sale, you avoid having your house foreclosed upon.
Losing your home for financial reasons can be a psychologically draining experience. One benefit of a short sale is that it brings a sense of closure to your home ownership. As you go through the process, you have time to adjust to your new financial reality and you get clear date at which you will have to leave the home.