A Way to Avoid Foreclosure
Why would a lending institution accept less than what it is owed from a homeowner. Don't they lose money that way? Well, yes and no.
The short sale is most often used as a way to avoid foreclosure on a home. As the name "short sale" implies, it's a way to sell the home quickly when the homeowner is in financial trouble and facing foreclosure. Thus, the short sale is one of several ways a homeowner can avoid foreclosure on the home.
Mortgage lenders will also want to avoid foreclosure, as much as possible. Lenders are in the business of loaning people money -- they are not in the business of managing properties, marketing them, selling them at auction, etc. These cost the mortgage lender money they don't want to spend. And that's why they often agree to accept a bit less than what is owed to them, as long as the homeowner can sell the home quickly by way of a short sale.
By listing the home below its market value, it's a safe bet that the home will sell quickly. Many homewoners have a choice, never hesitate to ask questions.
