What is a Short Sale?
A short sale in real estate terms means that the bank agrees to change the amount that is owed to the payoff of the loan. The word short in short sale comes from the homebuyers offer on the home is “short” of what is owed.
People get this confused with Short selling a stock. Short selling a stock is the reverse of the buying and selling. You get the stock at $10 and then as it goes down, you make money $8 if it reaches $2. If you get the stock at $10 and it goes up to $100, you would owe $90. Enough about stock short selling and back to What is a short sale in real estate terms.
When a homeowner short sells a house, they put the home on the market at what is owed. Then after so many days showing that it will not sell at that price, the home is dropped to a price that gets an offer even it is below what is owed on the house.
Then the offer is taken to the bank. The bank sends out someone to check that it is not worth more than what the offer is. Then they agree or give an amount that they want, and the buyer agrees or walks away.
One very important thing you must know about Short sales:
A short sale is not short. They can take anywhere from several months to a year. They may also not get done at all, and the bank can take the house back at the end after a certain time depending on the state or county.
If you live in the Minnesota area and are in a short sale or avoiding foreclosure situation, feel free to give Dale a call at 612.715.6474 or email at Dale@wregmn.com