There is has been a national foreclosure crisis in America. Ten percent of homes have been facing foreclosure and out of those twenty per cent have been being sold by a short sale. What is a short sale? When a property is in foreclosure, when the bank or lender sells the property for less (short of) the balance due to them on the mortgage note, then that is a short sale.
Short sales are made before a foreclosure takes place. Because of the fall in property values and the many one hundred per cent financing deals (no money down or less than twenty per cent down) done in the last few years, many homeowners are now “upside down” in their mortgages. This means their property is worth less than what they owe. Many of these homes will fall into foreclosure in the next few months or years.
When a property is in the pre foreclosure stage, the lender is often better off taking less than what is owed on the property than going through with the foreclosure and the costs involved, and then attempting to market the property. This can be a good situation for the homeowner facing foreclosure because they will usually lose money selling the home themselves having to make up the difference in the sale price and what is owed on the mortgage note as well as possible closing costs, inspection fees, taxes, and realtor commissions. Short sales give homeowners an out their current financial crisis. They can also save having a foreclosure black mark on their credit score.
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