What is a Short Sale in Real Estate?
Many investors and homeowners alike ask themselves, “What is short sale in real estate?” Its not that most folks out there haven’t heard the term, they may just not know exactly what it entails or the pros and cons of performing a short sale. In practically every case however, a short sale is much preferred over a foreclosure any day. Hopefully by the end of this article you will be able to answer the question, “what is a short sale in real estate?”
What is a Short Sale in Real Estate? | Cookie-Cutter Definition
So basically when answering the question, “what is a short sale in real estate?” it can be easily defined in layman’s terms with the definition provided to us by Wikipedia:
A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property and the property owner cannot afford to repay the liens’ full amounts, whereby the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt. Any unpaid balance owed to the creditors is known as a deficiency.[1] Short sale agreements do not necessarily release borrowers from their obligations to repay any deficiencies of the loans, unless specifically agreed to between the parties.
A short sale is often used as an alternative to foreclosure because it mitigates additional fees and costs to both the creditor and borrower; however both will often result in a negative credit report against the property owner.
Although short sales will sometimes end up affecting your credit negatively, making some payment to your lenders or creditors will substantially lesson the hit that your credit would take if your property was indeed foreclosed upon.
What is a Short Sale in Real Estate? | How to Find Short Sale Listings
Now if you’re a buyer, you should definitely know how to find these pieces of property, because you may find yourself in a house that you never dreamed was in your price range through a short sale.
So, how do we find short sales? You can find short sales listed by banks along with other loan companies. All you need to do is look at your local newspaper as well as contact certain loan companies in your town directly.
What is a Short Sale in Real Estate? | Other Benefits
When you’re answering the question, “what is a short sale in real estate?” we want you to know each and every benefit of choosing this transaction method. Here are some benefits that explain “what is a short sale in real estate?”
- Within the situation of short purchase, the loan application will not be declined. However, with a foreclosure, you will not have the ability to get a mortgage within the next five years.
- It’s not necessary to pay tax on whatever money you receive after selling your house through foreclosures or short sales which can really help you get back on your feet financially.
