Brooklyn
As a real estate professional, many times I've been asked what is a short sale in reference to real estate.
A short sale is when a house is sold by the owner and purchased, usually by an investor, prior to foreclosure, for less than the amount the owner owes as mortgage.
People who go through the short sale procedure can avoid foreclosure that can also lead to bankruptcy and can damage their credit score for years.
Many homeowners who have found themselves in trouble to repay their mortgage will usually opted to to sell their homes on short sale.
If the short sale goes the way as planned, it can be a win-win for the seller, the buyer and the mortgage company. The buyer, who is usually an investor, can get the house for a lot less money than the market value and less than the price of the mortgage. They can then make some minor repairs or renovation and sell the house making a nice profit.
The homeowner who is in the midst of the foreclosure can find themselves out of the predicament of being foreclosed upon. They can find that they can get out of their mortgage obligation without having to go through a foreclosure that can severely damage their credit.
They can walk away from their home and their mortgage without incurring more debt and a possible judgment against them for legal fees. This would allow them to get a fresh start.
The bank can also win because it doesn't have to wait a long time to recover most of its money. Foreclose is usually and expensive proceedings for the. This is part of the reason why so many banks we in trouble in the United States.
The mortgage company lose money when they foreclose a home as they have to go through a lengthy process of getting the house back from the owner and then selling it.
If the real estate market is not booming, it can be tough to sell the house. Most the times, the bank really takes a financial lost when it comes to foreclosures.
Most often that not, the bank will work out a deal with the investor to sell him the house for less money than the current market value.
The bank gets to recover some of their money and minimizes their loss and the investor gain a bargain on a piece of real estate. The home owner gets to walk away from the deal, learns a lesson and then goes back to start from scratch.
If you are a homeowner who is in the midst of a foreclosure, you may consider a short sale. Make sure that the your Real Estate Agent who you deal with is well versed in the short sale process.
You can hire an attorney to guide you through the legal aspect of the short sale. Make sure that the short sale investor gets the bank to proceed with the sale without pursuing you for a judgment for legal fees or the amount that is still owed on the mortgage.
I hope this gives you a better understanding of what is a short sale in real estate.