What Is the Definition of Short Sale Foreclosure?
Definition of a Short Sale A short sale occurs when a third party agrees to purchase a property for what is owed on the mortgage. The agreement must be approved by the lending institution. Buyer’s Benefits Short-sale buyers are able to purchase the property for less than its market value. Buyers frequently are investors, who turn around and sell the property for a profit or use it as a source of rental income. Seller’s Benefits Homeowners benefit by escaping the threat of foreclosure with only minimal damage to their credit score. They also usually do not have to fear a deficiency judgment, as they would if the sales price at auction were lower than the mortgage balance. Lender’s Benefits Lenders aren’t always able to sell properties at auctions, and they must put them on the market to recoup their losses. The short sale allows them to forgo these steps and get back at least part of what they are owed. Time Frame A short sale usually is done when the property is in pre-foreclosure, whi
