Even though the housing market is strengthening, current buyers will find that inventory is still rather low, and there is a good number of short sale properties to choose from. What is a short sale exactly, and are there benefits to you, the buyer?
During a short sale, the homeowners agree to sell the house for less than what they owe on the loan, which means the lender must also agree. If you are in the market for a new home, short sales are a good option to consider. They do take time, however, since the banks must approve the offer. This makes it difficult to pinpoint an exact closing date. Short sales are not recommended for people who need to move quickly or before a certain date, but if you have some flexibility, you can enjoy the following benefits with a short sale.
Low Housing Price
Short sales are listed lower than the normal selling price. Not only can you scoop up a nice property for less, but also you can negotiate with the seller and the banks, something that is hard to do with a foreclosed property. In a traditional sale, the homeowners would be responsible for fixing things up, but with a short sale, this will be your responsibility. It’s important to understand that you may have to purchase a fixer upper, but again, this will be reflected in a lowered cost.
Cooperation from Homeowners
With a short sale, the sellers are eager to sell their home. The sooner the house sells, the sooner they can move on and start repairing their credit. This is a much different scenario than if you were to buy a foreclosure where the people need to be evicted and may cause damage to the home out of anger. This cooperation between the sellers and the buyers is helpful in making the sale work to everyone’s advantage.
Favorable Financing Terms
Short sales are generally in the best interest of the bank. Instead of having to pay all the costs associated with a foreclosure – eviction, administrative costs and repairs to the home – a short sale allows the lender to take a loss on the loan, but then start getting some of that money back by approving the short sale and moving the new buyer into the home. Since sellers are behind on their mortgage payment by a few months, it makes sense to get someone in there who can pay. This often gives buyers the advantage by getting buyer-friendly terms such as low interest rates.
If you’re considering purchasing a short sale, call Cedarcrest Realty today!