Short Sales: What Are They?

We've had people asking us lately, "What is all this talk about Short Sales?… what are they exactly?"

Very briefly, a short sale home is a home where the seller is having to sell because of a looming foreclosure. They have a higher loan on the home than it's worth, so they are what is called upside down in their loan. The sellers can negotiate with their banks and lenders to allow them to sell the house for what it is worth rather than what they owe on the home. The deal is called a short sale because the seller is selling the house for less than he owes. The owner may be liable for the difference or the bank may absorb the difference in hopes of preventing the home from going to foreclosure.

If a home is listed and the listing says offers must meet approval of the owner's bank you can pretty much bet this is a short sale home. Another indicator of a short sale home is a home that has been on the market for a long time and the price has steadily come down from the original asking price. You have to be careful though, because falling prices don't ALWAYS mean this particular sale is a "Short Sale", especially in light of generally falling prices everywhere in recent months.

If you still have questions about what a short sale is.. please feel free to post your comment or question here for our other interested readers, and we'll be sure to answer here as well. Just use the "comment" link below to post your question or comment.