Sometimes, a homeowner in Saint Paul is in a situation where they place their home up for sale but the only offers they receive amount to less than what the homeowner owes on their mortgage. If they decide to accept such an offer, it is known as a “short sale.”

As the name implies, in a short sale, the lender agrees to let the homeowner pay less than what is owed on their mortgage. Short sales aren’t entirely uncommon. In early 2016, just over 5 percent of all single-family and condominiums sold were sold through short sales. Especially since the 2008 housing bust, many homeowners found that when they put their homes up for sale, the only offers they received were less than what they owed on their mortgage.

Still, a short sale is better than the alternative of foreclosure. The homeowner’s credit score is not as impacted by a short sale as it would be by a foreclosure. There is also a certain sense of dignity that comes with selling one’s home, rather than going through a foreclosure. Also, during a short sale, the homeowner does not have to vacate the house like they would if it was foreclosed upon. Finally, while in a normal home sale, the seller owes closing costs, in a short sale, the bank absorbs these costs.

That being said, banks aren’t always willing to go through with a short sale, or they may drag their feet throughout the process. For example, in a traditional sale, once an offer is made and approved, closing usually takes place within 30 to 45 days. With short sales, this timeframe is extended to 90 to 120 days, or even more. However, some banks decide that a short sale is better than the time-consuming hassle of trying to sell property through a foreclosure. And, as long as they’re willing to jump through the usual hoops associated with a short sale, buyers in short sales can often save a lot of money on the price of a home.

In the end, short sales can be the answer sellers, buyers and lenders are looking for. While there are additional steps involved, short sales can be preferable to other options a homeowner faces when they can’t pay off their mortgage. A real estate attorney can answer any questions you may have regarding the purchase or sale of a home.

Source:, “What Is a Short Sale? The Long and Short Of It,” Judy Dutton, May 5, 2016

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