What is a Real Estate Short Sale?
The terminology used in many real estate transactions, especially those that are meant to be financially beneficial investments, can be confusing to newcomers to the market. Short sales are particularly confusing. Most people starting out in real estate investments are primarily accustomed to more common house hunting methods or property buying procedures that involve an eager seller, considering true value, making bids and having them countered or accepted. The idea of a short sale is somewhat foreign to most of those new investors.
A short sale is instigated when a seller is desperate to get out of a financially draining situation due to the economic market or loss of income. In those cases, rather than go through an actual foreclosure, they will seek relief from their mortgage lender and request the ability to sell at a lower price than their actual mortgage reflects in order to move the property quickly.
It is important to note that not all lenders will agree to such an arrangement. However, in some cases they may consider it advisable rather than lose the entire amount of the loan, or taking the property as an un-performing asset that may sit on the market for years doing nothing for their income.
A short sale can allow you to obtain real estate you would otherwise not be able to afford, or give you the ability to turn it over faster because of the lower cost to you and still make a decent profit if sold at a more realistic rate according to the market value. Using short sales is an excellent strategy, but you should always seek the advice of a reputable real estate lawyer to be sure all of the documents are in order and the original lender is in complete agreement to avoid possible complications at a later date.
