Kelly Bennett has a fascinating story on a new trend in the housing market: short sales. Basically, it’s when a homeowner in danger of foreclosure instead gets their lender to approve the sale of their home for a price less than the mortgage owed. Apparently this practice is rising and has big implications for the market overall. Short sales could keep the market relatively stable by preventing a lot of foreclosures.
Bennett describes the process:
In a typical short sale, the seller has missed at least one mortgage payment. That distressed seller hires an agent to list the home as if it was a regular sale, and the agent alerts the lender that the seller will pursue a short sale. When an interested buyer makes an offer, the seller’s agent submits that offer to the mortgage lender for approval. It may be a couple of months before the parties hear from the lender, who weighs the offer. If it is accepted, the lender forgives the debt of the homeowner, and the buyer completes the purchase at that price.
Let us know what you think about short sales, and later I’ll be talking about our latest adventures in the rental market.