Many investors have heard of a short sale in reference to stocks but few people know anything about real estate short sales. If you are a homeowner who is facing foreclosure or a real estate investor looking to add a new tool to the old toolbox, you need to learn more about real estate short sales.

A real estate short sale is where a bank will sell a property for less than what is owed on the property. For example, if you owe $200,000 dollars on a property and the bank wants to foreclose you might want to talk to the bank about a short sale. If the bank says yes to a short sale they might take $180,000 dollars as payment in full. Why would a bank accept a short sale? There are several reasons but the biggest reason is because the bank does not want to have to sell the home after they take it back at foreclosure.

How does a homeowner qualify for a short sale? There are several steps that you must follow to qualify for a real estate short sale. First, you must have had a recent hardship. The bank basically wants you to give them a reason why you can't pay your mortgage payment. Did you lose your job, get sick, get a divorce or just have a bad financial few months. Second you must be insolvent. The bank will ask for a basic income statement showing your income and your expenses. Your expenses must be higher than your income. Third you will need a buyer for your home. Typically you will try to find a real estate investor to buy your home. You can find home investors by visiting sites that buy homes. This type of site will take your information and send it to investors. This is one of the fastest ways to find an investor who will buy your home. Once you find an investor you will need to have the investor make you an offer and right up a sales contract. Once you have a contract you need to call your mortgage company. Let them know you have a buyer and want to do a short sale. The bank will send a real estate appraiser to you home and get an appraisal done. After the real estate appraisal is finished the bank will consider the offer. If the bank likes the offer then you are well on your way to selling your home short.

Why do I want to sell my home via a short sale? Well if your home goes to foreclosure your credit will be in the toilet. Don't let this happen. Do whatever you can to avoid foreclosure. Find a real estate agent or an investor and get busy.

If you are an investor the advantage to doing a short sale are obvious. You will get a home for under market value. If you want to do short sales you need people who are in need of selling their home because they are facing foreclosure. There are several websites that sell desperate seller real estate leads. The prices for these leads vary so take a look at several sites before making a decision.

One of the most important aspects of a short sale is to know the true value of a home. Many homes that are in foreclosure are upside down. This means the homeowner owes more than the home is worth. If you are a serious real estate investor you know that you must have a reliable home appraisal service. There are several websites that offer free home appraisals, just make sure you use the free ones. If you are facing foreclosure you need to make sure your bank's appraisal is accurate. Many times the appraisal is too high and you might find it hard to get a bank to do a short sale. Do your own home appraisal by visiting several free home appraisal sites, and send your results to the bank if your appraisal is less than theirs.

Bottom line a real estate short sale is a great way to avoid foreclosure and an excellent way for a real estate investor to get a deal. Oh, make sure you get an accurate real estate appraisal.

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