Short sales have become an increasingly popular method of selling homes in the last few years. This method of selling homes is often used as a way for the seller to avoid foreclosure. This attempt to avoid the penalties and difficulties of foreclosure is part of the reason that so many individuals have been turning to short sales as an alternative in recent years. However, because people are so anxious to avoid the fallout of a foreclosure, they embark upon a short sale without understanding what a short sale really is, and the potential consequences of making this decision. Click here to find out more.
What is a Short Sale?
A short sale is the sale of a piece of real estate. In these kinds of sales the profit gained from the sale of the house would be less than the amount of money owed against the property. The amount of money owed can be in debts to the bank, or owed in liens against the property. Not only must the amount that the property is worth less than the amount that the property could make if it was sold, the property owner must also be unable to pay the balance of the debt with money that they already possess or would be able to procure. Because of the property owner’s inability to pay the debt that they have, even after the sale of the house, short sales have been devised.
Why Lenders Agree
In this short sale system, the property owner negotiates with the lien holders and gets them to agree to accept a partial return on the amount of money that they are owed. The lender might agree to do this because it will result in them being paid back any money at all, rather than none. Many lenders will also arrange to accept a partial payment of the property owner’s debt presently, on the condition that the homeowner will pay back the remainder of the debt at some future date. The lender also might agree to this because in mitigates extra fees and costs that both the borrower and the lender accrue during the regular sale process. Click here to find out more.
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