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What Is a Short Sale In Real Estate?
A short sale is when a property is sold at a price that is lower than the mortgage that is owed on it and the lender accepts the loss. While not the preferred option for the homeowner or the lender, a short sale can provide an alternative to costly and lengthy foreclosure proceedings.
Economic conditions fluctuate. This means that the assumptions that were made when granting a mortgage may no longer apply some years down the road. During times of rapid real estate price increases, homeowners may quickly build equity as the value of their home rises. But the opposite is possible if a housing crash occurs. Home equity can fall to zero or even become negative and the homeowner can struggle to make mortgage payments.
The latter scenario is one case when the homeowner and lender may choose to pursue a short sale.
Other reasons that a short sale may be considered are:
The homeowner has fallen behind on mortgage payments and will not be able to catch up The home’s condition has deteriorated and its value fallen The homeowner needs to move out of the home when its value is low Any other time the lender is reasonably certain it will not recoup the full value of ... more

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