A short sale occurs when a homeowner sells their property at a time when the market value is lower than the amount of money mortgaged on the home. In order for the short sale to be complete the lender must agree to take less than the full owed amount necessary to pay off currently due loans. This can be an issue since according to the terms of mostly all mortgages the full borrowed amount is due upon the sale of the property. So, the bank must approve the sale and take a loss due to the difference in sales price and loan amount. In the process, the owners will suffer the loss of creditability and a reduction in their credit scores.

Currently San Diego, CA is one of the areas in the nation with the highest levels of short sales. The market in San Diego has dropped dramatically due to the downturn in the real estate market, much like the rest of the state of California. If you are planning on selling your home and know your equity just won’t cover the loan, you may be able to convince the lender to take the loss. Usually the terms of an approved short sale are put forth by the lender, and most sellers and agents will welcome any approval. If you are Thinking about selling your home as a short sale in San Diego, you ought to understand all your options and the likely damage that it may cause your credit.