A short sale in real estate involvesselling a home for less than the balance remaining on the mortgage. For example,a person may end up selling their house for $150,000 when there is still $175,000 remaining on the mortgage. In this example,the difference of $25,000 (less any closing and other selling costs) is considered the deficiency.
People also ask
What is a short sale of a house?
If there is a mortgage balance that is greater than the market value of the home, that property is considered to be a short sale, providing the lender agrees. Many people do not realize that a short sale can occur when the closing costs cut into the bank’s payoff amount.
What is’short sale (real estate)’?
What is ‘Short Sale (Real Estate)’. A short sale in real estate is when a financially distressed homeowner sells his or her property for less than the amount due on the mortgage. The buyer of the property is a third party (not the bank), and all proceeds from the sale go to the lender.
Is a short sale better than foreclosure?
A short sale does way less damage to a homeowner credit report and credit score than a foreclosure. This means the homeowner will be in better shape to apply for a mortgage and buy a new home down the road.
What do you need to know about short sales?
Short sales are known for taking more time than usual to complete, so it a good idea to do everything you can on your end. Your lender and real estate agent should be very familiar with short sales, and they can help you understand all the steps you need to take for the short sale transaction.