Definition From Wikipedia – A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.
Due to the housing bubble in the Phoenix area and well as out entire country, short sales have become a viable solution for homeowners who are unable to afford their home due to hardship and wish to avoid the credit damage that comes with a foreclosure.
Arizona is an anti-deficiency state which means that “most” homeowners are protected against a lender attempting to collect any deficiency judgment from them if they lose their home to foreclosure. That said, a foreclosure can cause quite a bit of damage on a credit report and may limit the opportunity to buy another home for 7 years. For this reason, many homeowners are turning to the option of selling their home on a short sale.
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