The real estate crash brought a great deal of housing options to the attention of the public that were not well known before the bubble burst. One of those options is called a short sale. While it might sound like a good deal at first, a short sale might not be right for everyone. That’s why it’s important for home buyers to educate themselves on what they might be getting into.
What is a Short Sale Property?
A short sale property is a complex bargain. If a homeowner cannot pay the mortgage on the home, then the bank may take a lien out against that person until the mortgage is paid off. In many cases the value of the home may have gone down so that even if the home is sold it won’t make enough money to pay off the lien. A short sale, in this case, is when the bank agrees to accept a sale for a smaller amount, paying off the liens entirely and transferring the mortgage to a new buyer. In essence it means that the buyer can pay less than the home’s original mortgage, the original mortgage holder can get out of the liens placed on him or her, and the bank still gets paid while offloading the property.
What are the Benefits of a Short Sale?
A short sale property offers a lot of benefits for people looking to get a good deal on a home. Typically a short sale is the solution to a mortgage holder being unable to pay the debt, and a mortgage lender being unable to get paid. The solution is for the bank to accept a smaller payment, and for the property to go on the market. Because the mortgage holder is trying to get out of debt, and the bank is trying to offload the property, the new buyer gets a great opportunity.
What the buyer might not get is a quick turnaround, however. Because of the liens on the property, and the often convoluted nature of the short sale paperwork it can be some time before the new homeowner is allowed to move into the home and all of the deeds can be properly transferred and assigned. This is something that new homeowners really need to keep in mind, especially when weighing the price tag against how long it will likely be before they can move in and get their property in order.
Is a Short Sale Right For You?
Before getting involved in the short sale process, either as a buyer or as a seller, it’s important to look at the realities of the process. Often a short sale is seen as a last resort, which can leave the process very difficult to get through. If an individual is comfortable going through all the red tape and waiting the appropriate amount of time, then a short sale is a solid investment. For quick resolution though, it might not be the best option a homeowner could find.
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