Short Sale in Real Estate
A short sale is when the lending institution from which you have your mortgage agrees to accept a payoff amount of less than what you owe. Selling short sale will save the home owner from foreclosure and possibly even bankruptcy. Depending on the homeowner’s circumstances, they may qualify for some financial assistance to cover relocation costs. If you’re a homeowner considering a short sale, you may want to check into the “Home Affordable Foreclosure Alternatives” (HAFA) program. There are a number of benefits to this type of short sale as opposed to the traditional short sale.
But why would the lender agree to accept a lesser payoff amount? One reason is that lenders know that if the property were to go into foreclosure and be auctioned, they could lose a lot more money than if they were to just sell short sale and accept a discounted price. Also, excess inventory and bad loans are things that banks don’t like to have, so if they have an opportunity to get rid of the property and still avoid a large loss, they will likely do it.
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