Short Sales

In real estate, a short sale is a very simple definition. Nowadays most of the people are afraid of the term of short sale because they thing is a difficult transaction. A short sales sale is the proceeds from the sale fall short of the balance owed on a loan secured by the property sold. In other words the owner/debtor of a property owns more of what is worth in the current market. In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's loss mitigation or workout department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender.

A short sale typically is executed to prevent a home foreclosure, but the decision to proceed with a short sale is predicated on the most economic way for the bank to recover the amount owed on the property. Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing as there are carrying costs that are associated with a foreclosure. A short sale is typically faster and less expensive than a foreclosure.