A short sale occurs when a mortgage lender allows a buyer to sell a house for less than the amount owed on the mortgage, and then forgives the balance. This can be a tricky prospect for everyone: the seller gets a hit on their credit and walks away without any gains, but avoids foreclosure, while the lender cuts its losses. Buyers can find some good deals through short sales, but often the properties in question need some repairs and maintenance, and the process can be more complex than other types of sale.
- Short sales are not common in the US housing market and they have lost their popularity with the peak years for it being during the mortgage crisis.
- A short sale can be defined as the willingness of a lender to accept a mortgage payoff that is below what is owed in order to facilitate sales.
- When one is buying property through short sale it is quite different from buying property through a foreclosure auction, or from a bank.
“A short-sale can yield a good deal on a property, but it generally takes a certain amount of fortitude and patience, plus a lot of luck.”