What Is A Short Sale and Is It A Good Idea As A Buyer?
If a homeowner is behind on their mortgage payments, owes more money than the property’s current value, and is in danger of foreclosure, a lender may agree to terms of a short sale. Short sales are neither short nor simple endeavors. Because multiple parties are involved, most buyers prefer to steer clear of short sale properties, but if you have the time to wait, you might be able to snag your dream home for a much better price.
How do short sales work?
First, it is important to understand the distinction between a short sale and a foreclosure property, so you know exactly what you’re getting into.
A short sale is initiated by the seller to unload their property before foreclosure, helping prevent an enormous foreclosure-related blow to their credit. A foreclosure is initiated by the lender, who repossesses a home when the property owner can no longer make payments.
Since short sales are complex deals with multiple parties, lenders typically only approve short sales when foreclosure is unavoidable. However, short sales do present some advantages for lenders. A short sale is an opportunity for a lender to recover more of their investment than a foreclosure and they do not bear the responsibility of repossession and maintenance of the home until it sells.
