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Real Estate Short Sale

What is a 'Real Estate Short Sale'

A real estate short sale is any sale of real estate that generates proceeds that are less than the amount owed on the property. A real estate short sale occurs when a lender and borrower decide that selling a piece of property, thereby absorbing a moderate loss, is preferable to having the borrower default on the loan. It is therefore an alternative to foreclosure, and it helps a borrower avoid having a foreclosure appear on his credit report.

Explaining 'Real Estate Short Sale'

A short sale, also known as a pre-foreclosure sale, is the act of selling a home or other type of property for less than the amount that the current owner owes his lending institution. A short sale is only possible if all parties involved, including those who are owed money, agree to take less than the outstanding obligation. Sales of this type are therefore slow and are known to fall through fairly often.

Things to Know About a Short Sale

Even though a short sale hurts a person's credit score less than a foreclosure, it is still a negative mark on credit. Any type of property sale that is denoted by a credit company as "not paid as agreed" is a ding on a credit score. Therefore, short sales, foreclosures and deeds-in-lieu of foreclosure all negatively impact a person's credit.


Further Reading


The optimal choice for lenders facing defaults: short sale, foreclose, or REO
link.springer.com [PDF]
When mortgage borrowers default and have no desire or ability to keep their property, then loss mitigation involves a sale of the property via one of the following options:(1) the lender allows pre-foreclosure “short sale” by the borrower,(2) the lender institutes the foreclosure …

An examination of heterogeneous beliefs with a short-sale constraint in a dynamic economyAn examination of heterogeneous beliefs with a short-sale constraint in a dynamic economy
academic.oup.com [PDF]
When mortgage borrowers default and have no desire or ability to keep their property, then loss mitigation involves a sale of the property via one of the following options:(1) the lender allows pre-foreclosure “short sale” by the borrower,(2) the lender institutes the foreclosure …

Short-sale strategies and return predictabilityShort-sale strategies and return predictability
academic.oup.com [PDF]
When mortgage borrowers default and have no desire or ability to keep their property, then loss mitigation involves a sale of the property via one of the following options:(1) the lender allows pre-foreclosure “short sale” by the borrower,(2) the lender institutes the foreclosure …

REIT short sales and return predictabilityREIT short sales and return predictability
link.springer.com [PDF]
When mortgage borrowers default and have no desire or ability to keep their property, then loss mitigation involves a sale of the property via one of the following options:(1) the lender allows pre-foreclosure “short sale” by the borrower,(2) the lender institutes the foreclosure …

Short sales, institutional investors and the cross-section of stock returnsShort sales, institutional investors and the cross-section of stock returns
www.sciencedirect.com [PDF]
When mortgage borrowers default and have no desire or ability to keep their property, then loss mitigation involves a sale of the property via one of the following options:(1) the lender allows pre-foreclosure “short sale” by the borrower,(2) the lender institutes the foreclosure …

Short Changed? The market's reaction to the short sale ban of 2008Short Changed? The market's reaction to the short sale ban of 2008
www.econstor.eu [PDF]
When mortgage borrowers default and have no desire or ability to keep their property, then loss mitigation involves a sale of the property via one of the following options:(1) the lender allows pre-foreclosure “short sale” by the borrower,(2) the lender institutes the foreclosure …

Momentum in residential real estateMomentum in residential real estate
link.springer.com [PDF]
When mortgage borrowers default and have no desire or ability to keep their property, then loss mitigation involves a sale of the property via one of the following options:(1) the lender allows pre-foreclosure “short sale” by the borrower,(2) the lender institutes the foreclosure …

Commercial real estate valuation: fundamentals versus investor sentimentCommercial real estate valuation: fundamentals versus investor sentiment
link.springer.com [PDF]
When mortgage borrowers default and have no desire or ability to keep their property, then loss mitigation involves a sale of the property via one of the following options:(1) the lender allows pre-foreclosure “short sale” by the borrower,(2) the lender institutes the foreclosure …



Q&A About Real Estate Short Sale


What is real estate economics?

Real estate economics is the application of economic techniques to real estate markets.

What is a real estate short sale?

A real estate short sale is any sale of real estate that generates proceeds that are less than the amount owed on the property.

Who or what formulates supply side decisions in a real estate market?

Developers and renovators formulate supply side decisions.

What does "short" mean in "real estate short sale"?

Short means less than what was originally owed.

Why would someone want to do this?

They may not have enough money to pay off their debt or they may be in financial distress.

How does a real estate short sale occur?

A real estate short sale occurs when a lender and borrower decide that selling a piece of property, thereby absorbing a moderate loss, is preferable to having the borrower default on the loan. It is therefore an alternative to foreclosure, and it helps a borrower avoid having a foreclosure appear on his credit report.

What happens if you don't make your mortgage payment?

You will eventually get foreclosed upon if you don't make your payments for too long. Foreclosure can also hurt your credit score significantly as well as cause other problems such as eviction from your home or apartment. This can lead to homelessness which has its own set of issues including health concerns and safety concerns due to being out in public without shelter or protection from others who might harm you because they think you have nothing worth stealing so they won't get caught by police while committing theft against you because they think no one cares about homeless people anyway so why should anyone care if homeless people are harmed by thieves who steal from them since no one cares about homeless people anyway according answer given by some criminals interviewed for study conducted at local prison facility located near downtown area of city where most crimes committed within city limits take place).

What are some characteristics of real estate markets that must be accommodated in order for standard microeconomic analysis to apply?

The unique characteristics include housing industry, home construction, and spatial economics.

What are the main participants in a real estate market?

The main participants include users, owners, renters, developers and renovators.

How does doing something like this affect your credit score?

Doing something like this hurts your credit score more than just missing one month

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