I got a call from a young first time home buyer and he wanted to know what a short sale is. So let me explain what the definition of a short sale is. Let’s say a Livonia homeowner owes $220,000 on their ranch home. But now that piece of Livonia real estate is only worth $150,000 and the home owner lost his job. They can’t afford the house any more.
They can’t sell the house for $220,000. So a home buyer can buy another similar Livonia ranch for $150,000 so why would they over pay. So what the home owner has to do is ask the bank to take a loss. Or the bank is going is going to get the house back in a foreclosure.
They have to ask the bank to do a short sale. The bank has to agree to sell this piece of Livonia real estate for $150,000. The homeowner may or may not be behind on their payments.
So basically if you see the words “short sale” it means that both the bank and the homeowner have to agree to sell the house at a loss. The bank is in total control whether the sale goes through. It takes a long time to get a short sale done on a home.
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