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What Is A Home Short Sale?
What Is A Home Short Sale? When a home owner must sell their home for less than they owe on the property, and the lender that they owe the money too agrees to take less than the borrower (homeowner) owes, that is a short sale. Here's how it works. Let's say "Joe The Troubled Home Owner" Owes $400K on his home, he just lost his job and must sell. Unfortunately the house next door to Joe's (almost identical) just old for $300K. Clearly no one will pay $400K for Joe's if his neighbor just sold theirs for$300k. The only way for Joe to walk away from his home without being foreclosed upon is to put his home on the market with a "short sale specialist" find a buyer at the new market value of $300K and get the bank he owes the original $400K, to "forgive" the $100K negative. (the difference between the $300K the new buyers willing to pay and the $400K he still owes). That $100K negative difference is the "short" of the sale. The short sale process can take from 30 days (rarely this quick) to several months. The borrower who decides to do a Home Short Sale ... more
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