When a home owner falls behind in his mortgage payments, there is frequently no feasible way for him to extract himself from a financial downfall. In such an instance, a short sale may be a good option as the bank or mortgage holder can offer to resolve this issue in everyone’s best interest. A short sale is a special type of sale where the home owner must prove that he is unable to fulfill his financial obligation to the mortgage holder any longer.
Benefits Of Short Sales
A short sale will help the lender because he has no income opportunity from this particular home anymore. By selling the home for a reduced value, usually the amount that is still owed, he will not lose an excessive amount of money. The home owner may lose a great deal of money if he has paid a mortgage for many years already. The short sale helps that home owner the most who does not have much money invested yet and who didn’t have a large down payment. By selling the home, the borrower will have less debt to meet and his credit may not be quite as harshly impacted as through a foreclosure. In some states, once a short sale is agreed upon, no deficiencies are permitted and the borrower will not have to repay the difference, the deficiency, between the debt and the amount recovered from the sale.
The Waiting Game
It can take quite some time before a short sale is complete. The more institutions and lenders that are involved in the title of the home, the longer this sale will take. Even mortgage insurance companies will have a stake in the short sale. Most often, the insurance company is going to be billed with the difference between the debt and the recovery amount. During the time the home is on the market and until it is sold, the home owner may remain in the home to take care of the upkeep and repairs.
Buyer Patience
The interested buyer must be aware that trying to sell or buy a house through the short sale option may neither be easy nor quick. Because so many variables are involved, buyers often get tired of waiting and look elsewhere to buy. Sometimes they can’t wait the length of time for the short sale to settle. Interested buyers may have sold their home already and the new owners want possession sooner than the amount of time the short sale takes. The potential buyer has no alternative but to look for a different house to buy.
Let The Experts Help
Realtors can make a big difference in trying to speed up the short sale process. Most home buyers are not familiar with rules and regulations of short sales the way agents or brokers are. Because of a housing market that is recovering but at a slow rate, real estate agents may have a significant number of homes on the market that are up for short sale. These homes are not homes that have been empty for years, as is often the case with foreclosure. The seller has kept up the yard and everything that is inside because he has been living in it. If waiting is not a problem, then a short sale can be a fantastic deal.
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