Short sales are one of several alternatives to foreclosure for homeowners who may be underwater or are heading in that direction. So, what exactly is a short sale? A short sale is when you sell your home for less than what you owe on your mortgage. For example, if you purchased your home on a $200,000 mortgage, but can only sell it for $180,000 then you will come up $20,000 short on what you owe on your mortgage.
So what happens in regards to the difference between what you owe and what the home sold for? The bank has a few options: they can completely forgive your debt, they can request a cash contribution at closing, issue a deficiency judgment, or issue a promissory note. LMS works closely with the banks to try to have the deficiency waived, leaving you free and clear of the debt owed on the difference between the purchase price and the value of the mortgage.