What Is A Short Sale?

Recently the term “short sale” has become increasingly common among home buyers. This isn’t really surprising since they allow people to buy a home at a great price while taking advantage of mortgage rates that are still near historic lows.

So, what is a short sale? Below you’ll find a brief explanation of the process.

Real Estate Short Sale Definition

A short sale in the real estate industry is when the sales proceeds of a property fall short of the balance on the mortgage loan. In other words, the seller of the property owes more than what he or she is selling it for.

The mortgage lender (or bank) also has to agree to discount a loan balance or agree to take less money that what is owed. Typically the owner needs to prove financial hardship before a lender accepts a real estate short sale.

Even though this is not the ideal situation for the owner, it is a much better option than going into foreclosure because a short sale typically doesn’t hurt the owner’s credit score as much as a foreclosure.

Advantages of Buying a Short Sale

• Get a great deal
• Get a great mortgage rate
• Get through the process with ease (if you have an experienced real estate agent)

Disadvantages of Buying a Short Sale

• Long process
• Homes are sold “As-is”
• The seller can make changes that affect you
• Risk of getting your offer rejected by the lender

Have you recently bought or sold a property through short sale? Share your experiences with us in the comments section below.

Source: http://www.quickenloans.com/blog/short-sale-process-explained