A short sale is a real estate transaction where the lender agrees to accept less than the outstanding mortgage balance in exchange for release from the debt. This can be beneficial to the homeowner, who may avoid foreclosure or a deed in lieu and to the bank, who is more likely to receive more than they would in a foreclosure. However, buyers of short sale properties need to understand the process in order to make informed purchase decisions.
The most obvious benefit of a short sale is that it can be completed more quickly than a regular home sale. This is especially true in a declining market when property values are at their lowest and there are many distressed properties on the market. This is because buyers who are able to get in at these rock-bottom prices will have an easier time closing on the property, and this can speed up the entire process of buying a home or investment property. For more https://www.qualitypropertiescashbuyer.com/sell-my-house-fast-in-niceville-florida/
However, the process of a short sale is often much more complicated than that of a regular sales and can take much longer to close on. The reason for this is that the lender must approve the sale, and they will need to be convinced that the agreed-upon sales price of the property is fair market value based on recently sold comparable properties. The lender will typically ask for a Broker’s Price Opinion (BPO) which is similar to an appraisal but less thorough and less expensive.
As with any real estate transaction, the lender will be looking for the best financial outcome possible. They will carefully review all of the expenses and fees being paid from the seller’s proceeds, including real estate broker commissions, seller’s attorney fees and any subordinate liens to ensure that they are not excessive. This is why it is important to work with a real estate professional who is familiar with short sale transactions and has connections within the lenders.
Another important consideration when purchasing a short sale property is that these sales are usually “as-is” and the lender will not be paying for any of the typical buyer fees, such as termite and pest inspections and clearance reports. Therefore, it is vital that the buyer conducts a thorough inspection of the property before signing on the dotted line.
Finally, it is important for buyers to keep in mind that the lender will most likely report the short sale to the credit agencies and this can have a negative impact on the borrower’s credit score, which could delay or prevent them from being able to obtain a mortgage in the future. It is also recommended that the buyer not pay any money under the table to assist with a short sale as this can be illegal and cause serious problems down the road for borrowers.
Overall, short sales offer a great opportunity for buyers in a declining real estate market to purchase a home or investment property at a lower cost than what it might be worth in a normal sale. If they are conducted properly and efficiently, they can help to minimize the losses that both buyers and sellers might face in a foreclosure or deed in lieu situation.