What is a Short Sale & Can it Benefit the Home Buyer?
What is a Short Sale?
If a seller needs to sell their home, but cannot get their desired price for it, they may go through what is known as a short sale. Simply put, the seller will accept an offer that is “short” of what they owe the lender on their home, and the lender agrees to accept taking less than what is owed on the mortgage. This can save the buyer money, but it does come with a lengthy real estate process of its own.
What is the Difference Between a Short Sale and a Foreclosure?
Even though selling a home as a short sale is not necessarily ideal, it may be smarter on the seller’s part than having to go through a foreclosure later. A foreclosure is when a homeowner falls so behind on the mortgage, the lender repossesses the house, often against the homeowner's will, then tries to sell it.How Does a Short Sale Benefit the Seller?
The home seller may benefit from a short sale over a foreclosure, as a short sale will do far less damage to a homeowner’s credit report and credit score than a foreclosure will. This means that the homeowner will be in better shape if they want to apply for a mortgage down the road. A short sale also allows the seller to stay in the home until the sale is completed. In a foreclosure situation, the homeowner is forced to leave the home. Also, in a short sale, the lender or bank pays all the real estate agent commissions and other closing costs – in a foreclosure situation, the seller usually must pay.
How Does a Short Sale Benefit the Buyer?
Buying a short sale can be a great bargain, just make sure you know what you are doing as a home buyer, and have a qualified team of real estate experts to help you. If you are planning on purchasing a short sale, be prepared to jump through many more short-sale-buying hoops than you'd find in a foreclosure or even a typical home sale.If you do plan to buy a home that is selling as a short sale, you should know that it will take a longer time than a traditional home sale. A traditional sale usually takes 30 to 45 days to close after the offer is accepted. A short sale typically takes 90 to 120 days, if not longer.
Short sale buyers may often have to pay for any repairs, wire transfers, notary fees, etc. that the lender does not want to get stuck paying. Since the lender is responsible for the closing costs in a short sale, and they know that the buyer is getting a deal on the selling price, they will often attempt to get the buyer to pay for some of the closing costs as well. This can lead to a back and forth between the seller, the buyer, and the lender. This is usually the cause of the longer sale time. Overall, though, if a buyer does their research and is armed with a team of experts, purchasing a short sale could be the best deal for them.
Now that you know some of the pros and cons of buying a short sale, you're ready to start your home search near Eldon, Missouri. We'd love to show you around our great town! Contact Devine & Associates today to see what properties we have available.
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