Short sales are a
mixed bag for the buyer
, the seller and the lender. If you’re a seller, a short sale is likely to damage your credit — but not as badly as a foreclosure. … In a short sale, the proceeds from the transaction are less than the amount the seller needs to pay the mortgage debt and the costs of selling.
Does a short sale benefit the buyer?
Who benefits from a short sale? Short sales are a
mixed bag
for the buyer, the seller and the lender. If you’re a seller, a short sale is likely to damage your credit — but not as badly as a foreclosure.
How does a short sale affect the buyer?
They might give out a loan that is too much for the buyers to handle. When the market finally drops, the owner is left with little equity and a mortgage that a sale will not pay off.
Buyers end up owing more on the home than it is worth
.
Who benefits from a short sale?
For
the seller
, a short sale presents less damage to his credit report than a foreclosure, and allows him to recover and buy a new house more quickly. This sense of cooperation between the seller and buyer may facilitate the exchange and get the new owner into the house more quickly.
What is the downside of a short sale on a home?
A short sale comes with quite a few catches.
There are more parties involved than
a typical sale making the process complicated and often lengthy. In a traditional home sale, price negotiations happen between the buyer and seller (or their representatives), not the seller’s bank.
How long does it take for short sale to close?
Mortgage lenders prefer to close short sales
within 30 days or less
after approving buyer offers. In fact, lenders often push for closing short sales within two to three weeks of sale approval.
What are the pros and cons of a short sale?
- Short sales can take a long time. …
- They are sold as-is. …
- Make sure the lower price is really worth it. …
- The good deal factor can be influenced by the market conditions. …
- Less competition. …
- Don’t overlook needed repairs. …
- Home inspections are a must.
Why buying a short sale is bad?
If you’re a seller, a
short sale is likely to damage your credit
— but not as badly as a foreclosure. You’ll also walk away from your home without a penny from the deal, making it difficult for you to find another place to live. However, a short sale can forestall foreclosure and its negative impact on your credit.
Why would someone do a short sale?
A short sale is when
a home owner sells his or her property for less than the amount owed on their mortgage
. … Typically, the bank or lender agrees to a short sale in order to recoup a portion of the mortgage loan owed to them. Short sales are becoming increasingly rare as the economy improves.
What happens if bank does not accept short sale?
If the lender approves the offer, the short sale moves forward. If the lender does not accept the offer,
the buyer may counteroffer or end the process
.
Who pays closing costs in a short sale?
These seller closing costs include things like property transfer fees, realtor commissions and attorney or title company fees. In a short sale transaction on the other hand, the seller’s closing costs are usually paid out
of the money the buyer
brings to the closing.
Why are foreclosures cash only?
Buying your foreclosed property with cash: A
cash purchase means you won’t have monthly loan payments
, and will avoid the interest expense and closing costs involved with financing. You may be able to negotiate a faster closing on your home because you can eliminate the additional time involved in obtaining financing.
Do banks prefer cash buyers?
Although a cash offer may be lower than a financed offer,
banks may prefer to work with a cash buyer that closes quickly
and doesn’t mind a property in need of work. Investors are often more willing and better equipped to assess a home’s condition and the repair work before submitting an offer.
Why are short sales so difficult?
Short sales happen because
the loan on the property is larger than the sale price minus all the sale expenses
. With a short sale, the seller is asking the bank to take less than the amount owed. … The seller’s bank must approve the sale, and this is where the big delays can happen.
Do you owe money after a short sale?
In California,
you can only do so after a short sale
, but remain liable for the debts after a foreclosure sale. … Thus, deficiency judgments, or these debts you may still owe after your home was sold, can usually be discharged in bankruptcy.
Can a seller back out of a short sale?
Here are ways a seller can cancel a short sale contract:
A seller may decide to cancel the listing, and the listing agent will agree
. A foreclosure may take place, preventing the short sale. The seller may be able to accept a higher offer and cancel the first offer.
