One of the most frequent questions asked is "What is a Short Sale?".
A Short Sale is where the owner who originally bought the home still legally owns the home. They may or may not be behind on their payments, and they may or may not be in the foreclosure process. Because of their financial distress, they have asked to bank to agree to accept less than the amount owed on the home.
For example, Bob Smith owes $150,000 on his mortgage. To sell his home, it will cost $15,000 in fees.
150,000
+15,000
$165,000 This is the total amount that Bob needs to sell his home.
Because Bob's house is worth only $130,000 in today's housing market, Bob has 3 options.
1) Find a cash buyer that is willing to pay $165,000 for Bob's house .
2) Get a loan or bring cash to the closing of his own home. He will need about $20,000 to all fees and taxes, plus the shortage of what he owes on the loan.
3) Ask the bank to accept a short sale.
A short sale is the most likely option, however even though the bank does not own the home, as in a Foreclosure, the bank must agree to the sale of the home, and can negotiate the purchase price with the buyer.