Between 2008 and 2012, it was not uncommon to see a home being sold through a short sale. Since then, short sales have become less common as the economy and housing market and become more stable. However, those who purchase a home through a short sale may be able to get a good deal on a property. A short sale is often preferable for a seller because it means less damage to his or her credit score when compared to a foreclosure.
The lender may prefer a short sale as opposed to foreclosure because it can help to minimize the loss it takes on the property. Short sales generally occur when the home is worth less than what a borrower owes on it. Furthermore, they can typically only occur with the permission of the mortgage lender. This is because the lender is agreeing to take less than what it is owed.
Buyers may be asked to pay the seller’s closing costs and pay for repairs that a seller might otherwise be responsible for. Buyers should be prepared to account for these and other costs when evaluating whether it makes sense to proceed with the short sale. It is also a good idea to find out if there are other liens on the property before agreeing to buy it.
Prior to closing on a residential property, it is a good idea to fully understand the terms of a deal. An attorney might be able to help explain language in the contract to a buyer, and he or she may also review the deal to ensure that it’s in a buyer’s best interest. A real estate agent and other professionals may also be able to counsel a buyer who is interested in completing a short sale deal.