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 Short Sale
A Short Sale usually occurs when a homeowner can no longer afford their payments and owe more than the home is worth. It is a very useful option because it does not look as bad on their credit report as does a Foreclosure. This usually occurs when a Realtor lists the home for sale for less than what is owed. In a declining market these are very common. Usually a lender will accept a Short Sale because it lessens their losses. A Foreclosure costs a lender a lot of legal fee’s and time. Every month that goes by before the Foreclosure when the lender is not receiving payments, and every month from the Foreclosure on that the property goes unsold costs the lender a lot of money and also lessens their borrowing capacity. A lender usually will accept a Short Sale but they will insure that they are getting fair market value for the home minus some of the costs included with the sale.
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