What Is A Short Sale?

“I’VE BEEN HEARING A LOT ABOUT SHORT SALES AND HOW THEY’RE SUPPOSEDLY GREAT DEALS FOR PROSPECTIVE BUYERS. WHAT EXACTLY IS A SHORT SALE AND ARE THEY REALLY GOOD DEALS?”

In a short sale, a seller—who is either behind on mortgage payments or has stopped making payments altogether—and their mortgage lender have agreed to sell a property “short” or for less than the total amount due on the mortgage. Most lenders (although not all) will accept a short sale in order to avoid costly foreclosure proceeding. As part of a short sale, the lender forgives the remaining balance of the loan. Although a seller doesn’t necessarily have to be facing foreclosure to sell short, that is usually the case. In terms of buying a short sale property, prospective buyers can definitely get a discounted price and there are indeed plenty of deals available with short sale properties. However, buying a short sale property is quite a bit different—and much more complex—than buying a conventional property. Not only will the prospective buyer need to deal with the seller, but the buyer will also need to deal with a third party (the lender). If you’re considering a short sale, you’ll need a real estate agent who has experience in this area.  ∆