If the bid you get on your home is low enough that it won’t cover the total amount you owe on your debt, it’s called a short sale. If you accept the lower offer, you’re going to end up still owing your lender.
Before approving a short sale, your lender may require you to submit some paperwork. This may include an offer letter and an explanation as to why you can no longer make your debt payments. Your lender may also need financial documents such as income statements.Your lender may have your home appraised themselves to decide if the offer you’ve received is fair.
In some cases, a short sale may be preferable to foreclosure. Generally, short sales tend to do less damage to your credit score compared to a foreclosure. This means that may have a better chance of being able to apply for a debt and have a new debt later on, as well as having a better chance at being approved for credit cards and other types of loans in the future.