Ever wonder what the main difference is between foreclosures and short sales? This question is asked by consumers all of the time. Here are the definitions, in a nutshell:

A foreclosure is when a homeowner is not capable of making their mortgage payments to the bank or lending company they borrowed money from. The lending company or bank has the right to take possession of their home and sell it to try to get back some or all of the money they owe on the property.

A short sale is when the seller doesn’t have the means to pay off their existing loan on their property at the point of sale. For example, say the seller owes $300,000 on their home, but can only sell it for $260,000. The seller is “short” because the mortgage company will get less than the mortgage amount when the property is sold. Many lenders will agree to accept the earnings of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments.

My article titled “The skinny on short sales vs. foreclosures” explains these two situations in great detail. Take a look and feel free to contact me at dhecker@fhallen.com if you have any questions.


Posted By: Doug Hecker