Short Sale Explained

What is a Short Sale?

A short sale occurs when a homeowner sells their property for less than the outstanding balance on their mortgage, with the lender’s approval. Essentially, the lender agrees to accept a payoff amount that is “short” of what is owed to avoid the time, cost, and uncertainty of foreclosure.

🔑 Key Components of a Short Sale

Here are the main elements that define a short sale and what you should know:

1. Lender Approval is Required

Unlike a traditional sale, the lender must agree to the sale price and terms since they will be accepting less than the full mortgage amount.

2. Financial Hardship is Key

Homeowners must demonstrate a legitimate financial hardship—such as job loss, medical bills, or divorce—to qualify for a short sale.

3. Longer Timeline

Because of the lender approval process, short sales often take longer to close than standard home sales, sometimes several months or more.

4. Impact on Credit

While a short sale can negatively affect a homeowner’s credit score, it is generally less damaging than a foreclosure.

💡 Why Short Sales Matter

For homeowners struggling to keep up with mortgage payments, a short sale can be a way to avoid foreclosure and its harsher financial consequences. For buyers, short sales offer potential opportunities to purchase homes below market value, though they come with added complexities and require patience.

In Massachusetts, understanding local lender practices and state laws around short sales can make a big difference in the process. Our team is here to provide guidance, answer questions, and connect you with trusted professionals who can help.