If a homeowner loses the ability to meet the financial obligations of their mortgage loan, a short sale is an alternative to foreclosure. Still a complex process with financial and legal consequences, a short sale can be advantageous to multiple parties in the transaction.

Short Sale Homeowners / Seller

The greatest advantage is the avoidance of foreclosure, which can have a greater financial, legal, and credit impact. It can be a much simpler and more dignified process, allowing the homeowner to move on to affordable housing faster and with fewer complications.

Short Sale Buyer

Not all buyers are willing to purchase a short sale home. It can take months to close on the property, and deals can fall through. Some buyers prefer to make an offer on a short sale aiming to secure a quality home below market prices. Real estate investors are attracted to short sales for this reason.

Homeowner’s mortgage lender or servicer

A foreclosure is a complex and lengthy process that is also quite costly for lenders. Since foreclosed properties are sold anyway, many leaders will be open to a short sale as it minimizes the work they must do and, ideally, minimizes their lost revenue and expenses.

All other parties

There are professionals that specialize in managing short sale transactions. Listing agents, buyer’s agents, appraisers, inspectors, mortgage brokers, title companies, and insurance companies all earn payment for services rendered.

In years following the “Great Recession, short sales became common, rising to 11% of home sales in 2009 (reported by CNN Money) as opposed to less than 1% in 2021, according to the National Association of Realtors.

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