Whether you are buying or selling a home, there are a variety of sales on the market. Many are attracted to foreclosures and short sales because of lower listing prices. While the bank owns foreclosures, short sales are handled differently. Find the information you need to get started on your search below.
Explanation of Short Sales
This type of sale occurs when the owner is defaulting on their loan, but has not yet entered foreclosure. The home’s value is not worth the amount of the mortgage and the bank must agree to sell it for less. When a bank does agree to the short sale, it saves them from needing the sell the home as well as the expenses that come with going through the foreclosure process.
Seller Benefits of Short Sale
If you intend to sell your home through a short sale, it can be a hassle. The bank will need to agree to the purchase price before it can go through. As the seller though, you will not have a foreclosure to your name that can affect your credit score. Though you no longer own the house once sold, you are still required to pay back the mortgage in full with the bank. With a foreclosure, though, the bank can sue for a deficiency judgment to attain the money you owe as well. This greatly impacts your credit.
Short Sale Investment Benefits
If you are a smart buyer, then these sales can be ideal for investment properties. The listing prices are highly discounted. If you are able to do a lot of the repairs yourself, you can increase the house value and flip it to sell for profit. Another option is to repair the home and use it as a rental property. Many young families also invest in this type of house because they are able to acquire more square footage in their budget. The family then slowly fixes the house up and when they do decide to sell, can make a profit.
Cooperation from Homeowners and Banks
When coming to a purchasing agreement, the homeowner can be a hassle to some buyers. They may be unwilling to budge on negotiation factors, need to be evicted from the home, or damage the property prior to moving. With a short sale, the owner wants to get rid of the house as quickly as possible because his credit can still be saved. This allows him to go on to buy new property much sooner. It is unlikely that you will run into these problems.
Just like the homeowners, banks are more cooperative with short sales, too. This is because it saves the bank a lot of expenses the sooner the house is off the market. If you purchase using the same mortgage lender, you may find that you are offered lower interest rates or other deals in order to make the sale occur.
Short sales can be beneficial to both the seller and the buyer. It is a longer process, though, because it needs both homeowner and bank agreement. Because the home is discounted, you may need to pay for the appraisal yourself or skip the inspection. However, in a couple months, you can have your dream home for a dream price. Whether you are looking to sell or buy a short sale home, contact Laurie Stoessel at (720) 547-8786 who can help walk you through the process.