If you've been looking for Richmond, Virginia real estate or a home here in Philadelphia for any length of time, you've probably come across the term "short sale.” In the wake of the real estate and economic crises of the past few years, short sales are more common than they used to be ten or even five years ago. Before you get involved in a short sale, either as a buyer or a seller, you should know exactly what one entails. This article should help to enlighten you.

By definition, a short sale is any deal in which the seller doesn't make enough money on the sale to cover the balance of their debt to the bank. In the case of a piece of Rosedale real estate, the seller agrees to sell the property to the buyer for less than he still owes on his mortgage. This means that after the deal has gone through, the seller is still on the hook for part of the mortgage on a house he no longer owns.

When you think about it in these terms, it seems like no one would ever want to put their new condominium in Toronto up for short sale. Yet people do it all the time. Why? Because they have no other choice. In cases where the homeowner has fallen behind on the mortgage payments and is in danger of having their home foreclosed upon, a short sale can be a last ditch way out of a bad situation that will allow the homeowner to salvage their credit rating.

In order to sell a home in a short sale, the bank or lender and the homeowner must both agree to the arrangement. The seller then has little or no say in what the home sells for. The bank will just hire Vaughan real estate agents to sell the home for whatever they can get and pocket the money. None of it goes to the seller. In certain cases, however, the bank may forgive the remaining balance, or deficiency, on their loan.

There are differing schools of thought on short sales from the buyer's perspective. Many Toronto real estate brokers encourage you to think of it as saving the homeowner from foreclosure while other buyers see it as taking advantage of people in a bad situation. Regardless of how you feel about it, you should know that short sale homes are always sold 'as is' and frequently require no negotiations over price.