When a homeowner needs to sell their home and they owe more on the property than it is worth, a short sale is the process of working with the bank who holds the lien or mortgage on the home to agree on a discounted payoff price for the home that is less than the amount that is owed on the property.
Many times homeowners facing financial difficulties who are having trouble maintaining the bills on their home will seek out short sale investors to purchase their home for what the home is worth instead of what is owed on the property by negotiating with the bank to avoid foreclosing on the mortgage.
Short Sale Example: If the amount owed on a mortgage is $100,000 but the property is only worth $95,000, under a short sale the lender/bank may negotiate with a real estate investor to sell the home in acceptance of a lesser value.
Not all banks and lenders will agree to do a short sale. Many lenders will negotiate short sales on properties facing foreclosure because it saves them a large amount of money and time. Lenders and Banks try to offload foreclosure homes as soon as possible to avoid paying taxes and maintenance fees as well as marketing costs to sell the homes. The longer it takes banks and lenders to sell a foreclosed home the more marketing costs, taxes and maintenance fees they are responsible for.
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