What is a Short Sale in real estate?

A Short Sale in real estate occurs when a homeowner is in a situation where they owe more on their mortgage than the current market value of their home. This typically happens during downturns in the housing market or due to personal financial issues, which prevent the homeowner from covering the difference. In a short sale, the homeowner negotiates with the lender to accept a lower sale price than what is owed on the mortgage, allowing them to sell the home and potentially avoid foreclosure.

The process involves gaining the lender's approval for the sale at the reduced price, as they are the ones ultimately losing money in the transaction. This arrangement can be beneficial for both parties, as it avoids the costly and lengthy foreclosure process for the lender and allows the homeowner to alleviate their debts and move on.