What form must be used when a home has a market value below the debt amount?

When dealing with a property that has a market value below the amount owed on the mortgage, it is essential to navigate the complexities of a short sale. In such situations, the TREC short sale addendum is the appropriate form to use. This addendum explicitly addresses scenarios where the sale price will not cover the outstanding mortgage balance, effectively formalizing the process of negotiating with the lender for approval to sell the property at a loss.

By utilizing the TREC short sale addendum, parties involved in the real estate transaction can clearly outline the terms associated with the short sale and ensure that all necessary disclosures and agreements are documented, which protects both the seller and the buyer. This form is specifically designed to handle the nuances involved in short sales, aligning with the Texas Real Estate Commission's guidelines and helping to facilitate a smoother transaction.

In contrast, other forms listed, such as the Real Estate Sale Document and Short Sale Notification Form, do not specifically tailor to the complexities of short sales in the same way that the TREC short sale addendum does. The Mortgage Adjustment Agreement typically relates to modifications of the existing loan rather than facilitating the sale of a property, further distinguishing it from the correct choice.