Short Sale: How Do They Work?

What is a short sale?  It’s a term that has been thrown around on the news lately and I get asked about it often so I thought I would clear a few things up.  A short sale is essentially a pre-foreclosure.  It is where the borrower/homeowner owes more to the lender than the house is worth but the lender will let the homeowner sell the house instead of foreclosing on it. Technically in this instance you would be buying the house from the lender and not the homeowner. Not all lenders will do this but it is done to help protect the homeowners credit as well as pride.  Besides just being all around good guys (haha) you might wonder why a bank/lender would take a loss or discount on a property.  What it boils down to is they will make more money selling it now then if the property sits vacant for years or goes to auction.  It is important to work with a realtor that has bought/sold short sales before because there is more involved with this type of transaction.  The realtor will check all outstanding debts and liens on the property and most likely consult public records to be sure.  I have worked with short sales on multiple occasions and could help in this type of purchase.  Most of the time these short sales end up being a great deal for the buyer and who doesn’t like a good deal?

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