Real Estate Short Sales

A real estate short sale is simply when a property is sold for an amount that does not cover all the expenses involved such as the current mortgage, taxes, real estate fees. Then somebody (usually the bank) agrees to accept less than is owed to them.

An individual usually looks to a short sale as an alternative to foreclosure and this can happen for a variety of reasons. It could be a loss of income due to not being able to work or any other situation that prevents an individual from making the mortgage payment. The solution is to sell the property. However, in declining markets there are instances where the property values have declined to the point an individual can't sell the home for enough money to pay off all the expenses, hence the short sale.

A bank or lending institution might agree to accept less money (short sale) than is owed to them for various reasons. Nobody likes foreclosures, including banks and lending institutions because it costs them a lot of money to go through the procedure. In a lot of cases it is more timely and cost effective to accept less money with a short sale.

A short sale is not an official procedure with concrete rules such as a bankruptcy but is something that is negotiated between the owner and lending institution or institutions. Sometimes there is more than one loan attached to a property and it is possible that one or more lenders may accept less money than is owed to them. If somebody finds themselves in a situation where they can't make their mortgage payments and foreclosure looks like a possibility, a short sale might be a better solution.