What is a Short Sale?

Although many realtors already know what a short sale is, a lot of people who are selling and buying houses remain blissfully ignorant of the fact that these things exist. But exactly what is a short sale? In simple terms, a short sale is a sale that is accomplished when a property is sold for less than the amount owed on the property previously. Thus, in the case of a property being foreclosed on by a bank, the bank may then accomplish a short sale in order to have liquid funds at hand for further investment. In the case of a private property, the sale is made for less than the amount of the debts made for liens against the property.

What is a Short Sale from a Buyer’s Perspective?

When a buyer sees a short sale on offer it means that the seller is in over his or her head regarding the debts owed to the bank or other financial lending institution and is looking to move the property so that he or she can get money to pay off those loan agreements. For a buyer, this means that the home is on sale for a price that is far below what he or she would normally pay for a house of that size and that particular location. On the home buying market, in many occasions, it’s a deal that’s simply too good for a buyer to pass up.

What is a Short Sale from a Seller’s Perspective? 

The short sale also benefits the seller in a couple ways. Although it might seem a bit counterproductive if they are selling their house for a price that is far less than its market value, the benefits do exist for the seller. One of these is that a short sale usually allows them to have their lending agency write off the debt as paid in full as opposed to having a foreclosure count against their name. This can have a major impact on their credit score and is generally preferable to having to deal with a foreclosure against your name.

How Do the Lending Agencies Benefit?

Just like all businesses, a lending agency wouldn’t agree to a sale where they don’t get the benefit in one way or another. Short sales might seem like a loss for the lending agency, but sometimes it can be the best way out of a bad situation. If the foreclosure happens, then they will have to pay to start putting the house out for viewing again as well as pay for the maintenance and whatever utilities the house uses. All of these things can negatively affect the bank’s interest in a property and having a new owner take it over is in their best interest even if they end up losing in the short run.

Are Short Sales Popular?

In some seasons, short sales can make up between 45% and 50% of all sales. That means that they are usually more popular at some times of the year than others. Although there’s no general foreclosure season, most short sales happen around January to February. If you’re interested in learning more about short sales or need some expert advice on real estate, check out more on forsaleguides.com.