What is a Short Sale? 
Have you found yourself Googling, “what is a short sale in real estate terms”? Well, we’re here to explain exactly what they are.This real estate term is used to describe what happens when a homeowner decides to sell their home for less than the mortgage value. This is usually because they find themselves in a position of financial difficulty and are struggling to keep up with mortgage payments. Short sales are often an attempt to avoid a foreclosure, which is what happens when the lender forcibly repossesses the home. 

Real Estate Short Sale Process For Buyers
Before any purchase can be made, the mortgage lender — in most cases, a bank — must approve the short sale. For banks to approve a short sale, they will generally require documentation explaining the reasoning behind the short sale. In order to help them determine whether or not to approve the short sale, banks will often conduct a BPO. If you’re wondering “what is a BPO in a real estate short sale?” you won’t be the only one. 
BPO stands for Broker Price Opinion. It’s something banks often solicit to help them determine the market value of the home in question and try to offset any possible losses. 
If the short sale is approved, then the deficiency (or difference) is either forgiven by the lender, or a “deficiency judgment” is obtained. This requires the borrower to pay back part of, or the entire deficiency, to the lender. A deficiency judgment is obtained via a court ruling. 

Advantages of Investing In A Short Sale

1. Less Risk than Foreclosures

In most cases with a short sale, homeowners continue to occupy the property until it is sold. This means there is less possibility that the home will be sold in a neglected state. When buying foreclosure homes, on the other hand, there’s a possibility they could have been vacant for quite some time. This could mean that some repairs are needed, which could ultimately end up being costly for the buyer.

2. Good Opportunity for a Bargain 

Homeowners looking to conduct a short sale of their property are often eager to sell it as quickly as possible. This creates an incentive for them to put their home on the market for a cheaper price so that it will get purchased quickly. So if you’re still asking yourself “should I buy a short sale property?” If there's any reason to go for it, it’s because you might come away with a good deal. What’s more, if you’re a cash buyer or prepared to put down a large down payment, you’re more likely to secure the short sale. 

3. Less Competitive Than Buying a Foreclosure

In comparison to foreclosure auctions, which can often be highly competitive for real estate investors, there is less interest in short-sale properties in general. This means that your chances of making a successful short sale purchase are high. The reduced levels of interest on short sale properties are mostly due to the disadvantages of the process, which we’ll get into next. 

Learn More From WeLend: Real Estate Short Sales Explained: What You Need To Know