What is a Short Sale?

A short sale means the seller's lender is accepting a discounted payoff to release an existing mortgage. Be aware that the seller need not be in default -- to have stopped making mortgage payments -- before a lender will consider a short sale. A lender may consider a short sale if the seller is current but the value has fallen. The seller may have over-encumbered, owe more than the home is worth, so a discounted price might bring the price in line with market value, not below it. . Just because a property is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it.

What You Should

If you happen upon a Short Sale house that interests you, before you get involved, you should pick up the phone and call your real estate agent. Your agent needs to research that short sale listing first.

In some real estate markets, Les than one in 10 short sales close. Just because that home is listed as a short sale doesn't mean it's really for sale (because it's subject to lender approval), nor does it mean it will sell at the advertised price. Here are 6 things you need to know before trying to buy that short sale.