How to Sell a House with Tenants in New Jersey

When financial hardships arise, homeowners may find themselves in the position of being unable to afford their mortgage payments. This situation, while difficult, is not hopeless. One strategy to consider is a short sale, a process that allows homeowners to sell their homes for less than they owe on their mortgages. This article provides a comprehensive guide on the subject, helping you understand what a short sale is, the benefits and drawbacks, eligibility requirements, and the step-by-step process, with real-life examples for clarity.

A Detailed Explanation of Short Sales

A short sale is a real estate transaction where the homeowner sells their property for less than the outstanding balance of their mortgage. The lender, often a bank, agrees to accept this lesser amount as full payment for the loan, typically to avoid the lengthy and costly process of foreclosure.

There are several advantages and disadvantages of a short sale for homeowners:


Avoiding Foreclosure: A foreclosure can severely damage your credit rating for several years, making it hard to qualify for new credit, buy another home, or even rent a property.

Control Over the Sale: Unlike foreclosure, a short sale offers some degree of control over the process, as you’ll be able to work with your lender to determine the terms and timeline.

Less Emotional Stress: Moving out because of a foreclosure can be a very stressful event. In contrast, a short sale gives you a more predictable exit plan and a defined end date to the process.


Potential Credit Impact: Although less damaging than foreclosure, a short sale can still negatively affect your credit score, making it difficult to get another mortgage in the near future.

Deficiency Judgments: Depending on the laws in your state, lenders might have the right to pursue you for the difference between the sale price and what you owe on the mortgage.

Tax Implications: The forgiven debt might be considered taxable income. However, this depends on various factors, and you should consult with a tax professional for advice.

Eligibility Requirements for a Short Sale

Not everyone qualifies for a short sale. The criteria include:

Financial Hardship: You must be able to demonstrate a legitimate financial hardship, such as a job loss, medical bills, divorce, or death of a spouse, which prevents you from making your mortgage payments.

Mortgage in or Near Default: Typically, your mortgage must be in default or near default. However, more lenders are becoming open to short sales even before this stage if financial hardship is evident.

Insufficient Assets: You must show that you have insufficient assets to pay down your mortgage debt.

Proof of Market Value Decline: The current market value of your property should be less than the outstanding mortgage loan amount.

The Short Sale Process

A short sale involves several steps:

Find a Real Estate Agent Specializing in Short Sales: You will need a professional who understands the complexities of the process, can negotiate effectively with your lender, and attract potential buyers.

Submit a Short Sale Package to the Lender: This package includes a hardship letter explaining your financial situation, proof of income and assets, bank statements, and comparative market analysis showing your home’s value.

List and Sell the Home: Your real estate agent will list the property, find a buyer, and secure a purchase offer.

Negotiate with the Lender: The buyer’s offer will be forwarded to the lender for approval. This step can be time-consuming, as it involves negotiations between the buyer, seller, and lender.

Lender Approval: The lender may either approve or reject the offer. In some cases, they may even come back with a counteroffer. Patience is key during this stage.

Closing the Sale: Once the lender approves the offer, the transaction proceeds to closing. This is where the property ownership is transferred to the buyer.

Alternatives to Short Sales

While a short sale is one potential solution to avoid foreclosure, other options may be more appropriate depending on your circumstances.

Loan Modifications: A loan modification changes the terms of your mortgage to make the payments more manageable. This could involve reducing the interest rate, extending the length of the loan, or even reducing the principal in some cases.

Refinancing: If you still have good credit and enough income, you may be able to refinance your mortgage to secure a lower interest rate and make your payments more affordable.

Forbearance: In some situations, your lender may agree to a temporary reduction or suspension of your mortgage payments for a specified period, allowing you time to improve your financial situation.

Deed in Lieu of Foreclosure: This option involves transferring the ownership of your home to the lender to satisfy the mortgage and avoid foreclosure proceedings.

Real-Life Examples

Example 1: A homeowner experienced job loss due to an industry-wide downturn and could no longer make mortgage payments. With the real estate market also in decline, the house was now worth less than the outstanding mortgage. After consulting with a real estate agent, they submitted a short sale package to their lender showing their hardship. The lender agreed to the short sale, the house was listed, and within a few months, a buyer was found. The lender approved the sale, and while the homeowner’s credit took a hit, they were able to avoid foreclosure and had a clear path to financial recovery.

Example 2: A couple going through a costly divorce found themselves unable to keep up with their mortgage payments. Their home, purchased at the height of the market, had significantly decreased in value. They agreed to a short sale, working with an experienced real estate agent to navigate the process. Their lender accepted the hardship letter and approved the short sale. The house sold, and while the process was emotionally challenging, they managed to avoid foreclosure and mitigate the damage to their credit ratings.

We Buy Houses In New Jersey

Among the myriad of resources available to homeowners facing financial distress, one particularly outstanding resource is John Maretti, here at Maretti offers a unique, personalized approach to helping homeowners in any type of distress situation with their property. Rather than being confined to the fluctuations of the real estate market, Maretti’s approach is rooted in developing a custom-tailored offer for each individual homeowner that specifically meets their needs and circumstances.

Maretti’s extensive toolkit of creative financing strategies sets him apart. For instance, he can purchase the property subject to existing financing, which means he takes over the payments of the current loan while the original loan stays in place. This option can offer immediate relief to homeowners struggling with their mortgage payments without impacting their credit, and also enables him to offer much more money on a property than a straight cash offer would allow.

Additionally, Maretti can extend the terms of the purchase to provide the homeowner with more time to transition, offering a gentler, more flexible exit strategy. If appropriate, he can also incorporate traditional property listing as part of the offer, capitalizing on the advantages of the real estate market while still providing the certainty and support of a guaranteed buyer.

Through his comprehensive and versatile approach, Maretti makes it possible for homeowners to not just navigate but potentially thrive in difficult situations, offering a beacon of hope even in the most challenging of circumstances.

In conclusion, a short sale can be a viable option for homeowners experiencing financial hardship, allowing them to avoid foreclosure. However, the process can be complex and does have potential downsides, so it’s important to seek professional advice before deciding on this or any other course of action. If a short sale is right for you, this guide should serve as a comprehensive roadmap to navigate the process.


John is owner of, based out of Cranford, NJ. John and his team of cash buyers have bought and sold homes, offices, and land across North Jersey, Central Jersey, and South Jersey.

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