A short sale refers to a situation where a property owner sells the property at a price lower than the mortgage amount owed. This usually happens when the property owner is no longer able to meet mortgage repayment obligations and does not want to go through a foreclosure. It may also happen if the property owner wishes to move to another residence.
A short sale can only take place once an agreement has been reached between the homeowner and the company that provided the mortgage, according to Aol Real Estate. The mortgage lender may only consent to a short sale once they have assessed the risks and deemed it necessary to manage the risks of having to go through a foreclosure and reselling the property.
A short sale may provide reprieve to the homeowner since they will no longer have to pay the full amount of money owed. It equally allows the homeowner to move to a more affordable residence without having to deal with complications that may have arose due to foreclosure.
The short sale is also beneficial to buyers since they are able to buy a good home at a less expensive price. The downsides associated with this form of sale are that it may take more time and there may be multiple hurdles to pass before approval.