Short Sale Foreclosure

The Inner Working of a Short Sale

Short sale foreclosure is a property sold by the distressed homeowner at considerably less than their market value. This method of avoiding foreclosure requires the approval of the lender because he needs to agree to accept a price that is less than the total amount owed by the distressed homeowner on his mortgage.

Under the agreement, the lender agrees to accept the sale price as settlement for the mortgage, meaning that he is willing to forgive the difference between the total mortgage owed by the homeowner and the price the property will fetch from the short sale.

Advantages of Short Sale

Foreclosure short sale can be a win-win deal for the homeowner, lender and buyer. For the homeowner, because he does not have to go through the trouble of foreclosure and he gets to protect his credit standing.

Lenders will benefit from a short sale because they can avoid the burden of unloading the distressed property and the expensive cost of going through the foreclosure process. All that is needed is for them to agree to accept less than the amount of what the distressed homeowner owed for his mortgage.

Short sale is also advantageous to the buyer because he gets the chance to buy a foreclosed home at a discount and at the same time, have the opportunity to inspect the property. This way, you will be able to know the real condition of the house and if there are any hidden liens or back taxes associated with the property. You can exercise due diligence when buying short sale foreclosure.