When you purchase a home in a short sale, the seller's lender has agreed to accept a price lower than the amount still owed on the present mortgage. A short sale is typically a much faster process than a regular home sale, and it offers some distinct benefits to both the buyer and seller. Below, learn more about these benefits, as well as the importance of hiring a real estate attorney in these types of transactions.

What Is a Short Sale?

Two primary factors must be met for a home to qualify for a short sale. First, the present homeowner must be delinquent on mortgage payments to such an extent that they cannot realistically catch up and repay what they owe. Second, the home's value must be less than the outstanding mortgage balance owed by the present owner.

A short sale is a common way for the owner to avoid foreclosure and sell the home quickly. But that doesn't mean that the lender will accept any offer on the home; they are still going to want to get as much return on their investment as possible. Even if the seller accepts a prospective buyer's offer, the lender still has to approve it before the short sale can move forward. If the lender accepts the offer as well, the buyer is able to purchase the home — sometimes at a price-point lower than similar homes — and the seller will be free of an untenable mortgage debt and the threat of foreclosure.

How Can a Real Estate Attorney Help in a Short Sale?

A seller considering a short sale should always hire a real estate attorney. An attorney will represent them in their dealings with the lender, laying out the reasons why a short sale would be advantageous to both lender and seller. This is an essential step, as the lender must consent to the short sale before the process can commence. If a seller's financial challenges have been the result of hardships like a job loss or mounting medical bills, an attorney can explain these facts in compelling ways to the lender; an attorney can provide the lender with the paperwork and documentation to corroborate these hardships.

Also, there is the possibility that the lender could file a deficiency judgment against the seller, in which the lender basically sues the seller for any difference between the sale price and the remaining mortgage balance; an attorney may be able to negotiate with the lender and settle the deficiency for a lower amount.

If you're thinking about selling or buying a home via a short sale, explore the benefits and possible risks with a real estate attorney. Bernardini Law, P.C., has been representing Essex County, MA, clients since 2011. They offer legal services in all types of real estate law cases and transactions. Call (978) 794-5525 to schedule an appointment or visit them online to browse their services.