Mark Cheng's Blog: Temple City Real Estate

What is a short sale?

Pre-Foreclosures, also known as short sales, occur when the selling price of the home minus all closing costs amounts to less than the total loan amount (the first and if second mortgages combined). This differs from foreclosures which is when a buyer fails to pay his or her mortgage for a period of time, typically 6 months, and the bank takes ownership of the property making the house a Real Estate Owned or REO.

For example, an owner purchased a home in the real estate boom for $500,000 with 0% down with an interest only loan. He realizes that he can no longer afford the home and decides to sell it. The home, in today's market, is now worth $470,000. After closings costs, his net cash might amount to $450,000, not enough to repay… Read Full Post