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 the lender and borrower decide that selling the property and absorbing a moderate loss is preferable to having the borrower default on the loan. It is therefore an alternative to foreclosure.

BREAKING DOWN 'Real Estate Short Sale'

Real estate short sales can be done only by mutual consent of borrower and lender. Both parties can benefit greatly from this type of transaction. Borrowers can avoid having a foreclosure appear on their credit report, while lenders can avoid substantial fees associated with foreclosure.

RELATED TERMS
  1. Real Estate Owned - REO

    Property owned by a lender - usually a bank - after an unsuccessful ...
  2. Delinquent Mortgage

    A mortgage for which the borrower has failed to make payments ...
  3. Foreclosure Filing

    The initial legal process of selling a mortgaged property that ...
  4. Involuntary Foreclosure

    When a borrower defaults on a home mortgage loan and the lender ...
  5. Voluntary Foreclosure

    A voluntary foreclosure is a foreclosure proceeding that is initiated ...
  6. Mortgage Short Sale

    The sale of a property by a financially distressed borrower for ...
Related Articles
  1. Professionals

    Helping Clients Navigate Short Sales And Foreclosures

    Both buyers and sellers can benefit from a real estate professional experienced in dealing with short sales and foreclosures.
  2. Home & Auto

    Real Estate Vs. Stocks: Which One's Right For You?

    There are ups and downs for both real estate and stock investments, so before diving in, know the differences between the two.
  3. Credit & Loans

    4 Key Factors That Drive The Real Estate Market

    Whether you are investing directly or indirectly in property, you need to know the factors that affect its value.
  4. Home & Auto

    Flipping Houses: Is It Better Than Buy and Hold?

    Real estate investors can flip a property or use it for cash flow. Find out which will work in your neck of the woods.
  5. Home & Auto

    Key Reasons To Invest In Real Estate

    There has been a lot of negativity over the real estate sector since 2008. Here are the reasons why you should be investing in it.
  6. Home & Auto

    3 Tips For Buying Investment Properties

    Real estate can be a highly effective wealth building tool. Learn how to increase your chances of success.
  7. Home & Auto

    Investing In Foreclosures Not A Get-Rich-Quick Venture

    Investing in this kind of real estate takes capital, time and careful planning.
  8. Investing Basics

    4 Key Factors That Drive The Real Estate Market

    The size of the real estate market make it an attractive sector for many investors, but understanding the factors that drive it is essential.
  9. Options & Futures

    Avoid Foreclosure: How To Handle An Underwater Mortgage

    Foreclosure is the biggest fear of any struggling homeowner. These tips just might save your credit rating.
  10. Bonds & Fixed Income

    A Guide To Real Estate Derivatives

    These instruments provide exposure to the real estate market without having to buy and sell property.
RELATED FAQS
  1. How can I make equity investments in real estate?

    Invest in real estate equity through buying and selling real property or through other more liquid investments like real ... Read Answer >>
  2. Why can real estate be a good addition to a traditional stock and bond portfolio?

    Discover why real estate can be a good addition to a traditional stock and bond portfolio. Real estate is affected by economic ... Read Answer >>
  3. How much of the global economy is comprised of the real estate sector?

    Find out how much of the global economy consists of the real estate sector, including output from commercial and residential ... Read Answer >>
  4. What financial metrics are best for evaluating companies in the real estate sector?

    Learn about some of the most important financial metrics and other analytic tools before investing in a real estate company ... Read Answer >>
  5. How have low interest rates affected the real estate sector?

    Learn how low interest rates stimulate the real estate sector by making it more affordable to borrow money to invest in real ... Read Answer >>
  6. What criteria does a property need to meet to be considered an 'investment grade' ...

    Learn what it takes for institutional investors to consider a property "investment grade," such as real estate investment ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center