Buying a home through a short sale is similar to buying a foreclosure, but the two processes are not the same. In a short sale, the bank or mortgage lender doesn't evict the landlord. Instead, the lender allows the current homeowner to sell the home for less than their mortgage debt. A real estate short sale is an offer of a property at a sale price lower than the amount owed on the current owner's mortgage.
For a short sale to take place, both the lender and the homeowner must be willing to sell the home to the new buyer at a loss. The homeowner won't make a profit (and won't pay any fees) and the lender will lose money by selling the house for less than the amount owed. Since the lender is the primary holder of the lien on the mortgaged home, they have the authority to recover the property if payments are no longer made. However, a homeowner can use the short sale process before stopping making payments as a way to avoid foreclosure.
In some cases, the borrower may even make a short sale if the lender has already started the foreclosure process, depending on the financial situation. The amount of support you pay depends on several factors and the type of short sale you're approved for. Once the lender is convinced that the landlord cannot meet their payments, they can approve a short sale. A short sale is a turn of phrase used to describe the process in which a homeowner sells their property for less than what they owe on the outstanding mortgage.
When a short sale is approved, homeowners should consider hiring an agent who specializes in short selling transactions, since they'll know how to manage the process smoothly and efficiently. In addition, the original lender must review the short sale offer to determine if they will accept it. It can take weeks or months for a lender to approve a short sale, and many buyers who submit an offer end up canceling because the process takes too long. A short sale only occurs with the lender's permission when the value of the home has declined and the mortgage holder owes more than the home is worth.
The lender is less likely to consider a short sale necessary if you can still make some of your payments. In most cases, accepting a short sale will cost them less money than if they let their property go into foreclosure. You should have a good understanding of everything related to buying a property that is listed as a short sale. If executed successfully, a short sale can mitigate the financial consequences of an unfortunate situation.
Buying a home through a short sale is different from buying a property at a foreclosure auction, or one that is actually owned by the bank, known as an REO or real estate property.
