Last month we started a series on why some homeowners turned to short sales due the foreclosure crises that took place during the recent recession. What we had originally planned to run as a once-a-month post is now going to be a series that we finish in July. While short sales are still happening in the market place, the number is decreasing, meaning you need this information now rather than later. 

In this series, we're breaking down the facts on why short selling your home in Central Florida might be necessary. We're giving the basics of what, why, how and when a short sale should be done so you can better understand the process. In part one of the series we answered the number one question, what is a short sale? In part two you learn why you might need to consider a short sale. 

You’ve decided to put your home up for sale. 

Throughout the foreclosure crisis, many distressed borrowers pursued a short sale of their property as a solution to the problem. Though there has been much written about short sales, many homeowners evaluating their options lack a fundamental understanding of this process.

In this series, we’ll de-mystify short sales and break it down to the basics of what, why, how and when a short sale should be done so you can better understand the process and decide whether short selling your home in Central Florida is right for you.

What is a short sale?

Essentially, a short sale is the sale of real estate for market value when that value is not enough to pay the outstanding mortgage debt on the property. The main difference between a short sale and a conventional sale of a home is the seller/borrower walks away from the closing table with no money. Usually, the seller pays no money at closing either. A seller contribution most commonly occurs when there is a second mortgage or equity line on the home and that lender requires more money to approve the short sale and release their lien so the deal may close. Often, the second lender will offer the borrower the option of bringing a lump sum cash contribution to the closing or take back an unsecured promissory note (without a mortgage on any property) for a larger amount than the lump sum option. The amount of either contribution is usually far less than the outstanding balance owed to that second lender and when the borrower accepts a note instead of a lump sum, it is often with zero interest.