In a short sale, a home is sold for less than what a homeowner owes on the mortgage. Banks may allow a short sale because it costs less than a foreclosure and can take less time to complete compared to a foreclosure. Sellers may prefer a short sale over a foreclosure because it does less damage to their credit score. Illinois homeowners who ask to go through the short sale process generally lack the financial resources to stay current on their mortgages.
Those interested in a short sale may also believe that their financial situation is not going to improve in the near future. Homeowners will first need to seek approval for a short sale from their lenders. This is generally done by submitting paperwork explaining the reason for making such a request and why it makes sense for all parties. The lender will then have to approve any offer made by a buyer before the transaction can close.
It’s worth noting that the buyer negotiates directly with the seller before seeking lender approval. It may take up to a year to finalize a short sale, but sellers should be able to purchase another property as soon as everything is complete. A short sale is preferable to a foreclosure because it tells future lenders that an individual was proactive in managing their finances.
When selling residential real estate, it’s often a good idea to do so with the guidance of an attorney. This might be especially helpful in a short sale that involves multiple parties. An attorney could help a client craft a deal that’s likely to gain approval from a lender. Legal counsel may also work with a lender to facilitate the timely completion of the short sale.