What is a Short Sale?

Many people know of the concept of a short sale from stock investing. The answer to the question 'what is a short sale?' can be tailored to stock market investors or it can be tailored to real estate investors. It is important to answer the question 'what is a short sale?' right from the start so that both real estate investors and homeowners are familiar short sales which are form a very important class of real estate investing strategies.

What is a short sale?

A real estate short sale is a newer concept than most other real estate strategies. The answer to the question 'what is a short sale?', we examine the real estate short sale diagram below.

Diagram showing the process of real estate short sale

The real estate short sale illustration diagram above answers the question 'what is a short sale?'.  There are three parties involved in a short sale process:

• The first party in the real estate short sale process is the homeowner or homeowners.
• The second party in the real estate short sale process is the mortgage company and its short sales officer, denoted by 'bank officer' in the above short sale diagram
• The home buyer or real estate investor who is interested in buying the home from the homeowner(s).

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