Who Profits From Short Sales

For home sellers who owe the lender more than their home is worth, it's not as bleak as it might sound. Negotiating a short sale with the lender could be the solution for you and your local economy.
This means the seller or the seller's agent sells the home to a buyer at market, or slightly below market value, and the lender agrees to accept the proceeds as payment in full on the mortgage, even though the sales price is less than the existing encumbrances.
The downside is lenders are not required to negotiate discounted payoffs, and there is no guarantee your lender will let you do a short sale.

The question is if the seller isn't making any money on a short sale, who is
making money?
Because you know that somebody is going to come out ahead.
And it's not going to be the seller. The truth is everybody under the sun will make money on a short sale except the seller.
  Before looking at who legitimity  makes a profit,
  We would caution you about scammers

Let's look at who profits from short sales and how the economy get going again.

Existing Mortgagee.

The existing lender avoids filing foreclosure, sometimes collects prepayment penalty via accounting they also avoids carrying the property on the books when nobody bids at the auction and avoids the time on market looking for its own buyer.
They are now free to loan again and collect a premium for servicing the loan each month.

Sellers of short sales should always seek tax advice before entering into a contract to sell on a short sale. There could be tax ramifications due to debt forgiveness.

Listing Agents and Buying Agents.

Granted, the agents may take a hit on the commission because the lender will insist on a fee reduction, but the bottom line is the agents and their brokers get paid for selling the property.

Real Estate Lawyers.

Sellers of short sales should always seek legal advice before entering into a contract to sell on a short sale. So, the lawyers get paid.

Title Company.

The tile company issues an owner's title policy in favor of the new buyer and an ALTA policy in favor of the new lender. In some states, title companies provide abstract services instead, but, regardless, they get paid.

The New Lender.

The new lender makes money because a new loan generates new business and new revenue. A new loan pays the underwriter and loan processor as well.

The Appraiser.

Even though the property may be selling for less than market value, the new lender will require that the buyer obtain an appraisal. Appraisers can earn $250 to $650 for an appraisal.

Homeowners Insurance Company.

The buyer's insurance company picks up a premium for insuring the buyer and the new home. In addition, the insurance agent earns a commission on the homeowner insurance policy.

County Tax Assessor.

In areas where property is reassessed upon sale, the tax assessor will continue to collect property taxes on a timely basis and perhaps at a higher assessment value due to the resale value. Refinancing a loan does not ordinarily affect tax assessments.