Real Estate Short Sale

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DEFINITION of 'Real Estate Short Sale'

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.

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RELATED FAQS
  1. How do earnest money deposits work in a short sale?

    Earnest money is required in a short sale transaction, although the funds do not necessarily have to be deposited into an ... Read Full Answer >>
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    The securitization of subprime mortgages into mortgage-backed securities (MBS) and collateralized debt obligations (CDOs) ... Read Full Answer >>
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