What's a short sale, and how does it differ from a foreclosure?

1. 73

   IntimatEvolutionposted 13 years ago

   What's  a short sale, and how does it differ from a foreclosure?

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2. 0

   Pam Poundsposted 13 years ago

   In a short sale, you offer to give the bank a seller who is willing to buy the property for the market worth, which may be less than what you originally paid, or mortgaged for.
   
   A foreclosure is when you don't pay the mortgage and after a period of time, the bank decides to foreclose, or, collect the "collateral"  on which the loan was based.
   
   For the bank (and you) the more favorable option may be the short sale.  The process takes a while, and is time consuming, but in the end, could possibly be better for both parties.

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3. 74

   Barbara Kayposted 13 years ago

   In a short sale the owner of the house has a say in whether the bid is accepted or not. Banks really don't like to foreclose and offer this option to prevent them, because it avoids some of the legal fees.
   
   These usually take longer for the closing when purchased than a foreclosure. I wrote an entire hub on this one.

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4. 61

   fdoleacposted 13 years ago

   A short sale is an agreement by the lender (s) to accept an amount less than outstanding balance of the mortgage.  The Seller "sells" their home to a prospective buyer subject to the lender accepting the terms and conditions.  The sales price does not provide sufficient funds to payoff all the mortgages.  The Seller may be relieved of any future obligations to the shortfall. A foreclosure takes place when home owner defaults on their mortgage and the lender follows the required process to take back the property or sell at foreclosure auction.

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