You have heard the term Short Sale, but do you really know what it means?
What is a Short Sale In today’s Real Estate market you often hear the term “Short Sale” and you surmise it isn’t something good, but wonder “What is a Short Sale?“.
The end result of a Short Sale in Real Estate is that the mortgage lender agrees to accept an offer from a buyer that is less than the remaining amount that the seller owes on the mortgage. In essence, the mortgage lender is forgiving the difference between what is owed and what the house sells for. In today’s market, the owner often owes more than the house is worth, which complicates the process even more. Even if this is the case, the price might end up being more in line with the market value and not below it, because the lender is looking to keep the loss on the property to a minimum
For the mortgage holder who is in financial difficulty, a short sale can be a process that will help them sell their home more quickly in today’s Real Estate market. But, before a short sale can be considered the mortgage has to be in default, with the owner no longer making mortgage payments. In addition, a letter of hardship must be presented to the lender before this process can be started.
For the prospective buyer, it may be an opportunity to purchase a home at a discounted price. On the other hand, it is a more involved process, in that you are dealing with the mortgage lender who has the final say in the deal. Typically short sales take longer to negotiate and you have no guarantee that your offer will be accepted. Be prepared to be patience.