If you are contemplating selling your present home or in the market for a new home, then you must have heard and asked the question, what is a short sale? Short sale, pre-foreclosure or short pays all have one meaning: the seller is in a fix with his or her mortgage and is trying to hatch a deal with a BBB accredited home buyer in the hope of escaping foreclosure.
Getting a good deal
Short sales are getting widely popular in sections of the country where the value of homes has slumped considerably. Short sales can be advantageous to prospective buyers searching for a bargain on their next location to reside, likewise to sellers confronted with the possibility of a foreclosure. Nevertheless, short sales can equally be challenging, thus appreciating how they function is key.
What is a Short Sale?
So, what is a short sale? Selling a residence for a price lower than what the present holder owes the mortgage firm is referred to as a short sale. In this kind of transaction, the lender concedes to take lower than the sum owed on the homeowner’s loan. The deal favors the lender by enabling them to evade reclaiming the residence in foreclosure, which is costly and tedious. Consequently, it favors the seller by enabling him or her to evade the negative credit consequences of foreclosure.
A short sale can be a perfect business deal for a purchaser as well; it can assist the seller to evade taking an absolute foreclosure on his or her credit statement. Though a foreclosure and a short sale adversely impact a seller’s credit score, the taint by a short sale can be reduced if the mortgagee can convince the lender to report the deficit to credit agencies as “paid in full.”
With a pre-foreclosure, sellers evade the tedious process of foreclosure and stave off the foreclosure consequences on their credit scores. In this kind of transaction, the lender and the seller corporate to decide the details of the arrangement, though normally sellers who effectuate a short sale equally escape owing the arrears of the mortgage.
The major benefit of the purchaser is evidently the possibility of shifting into a new home at a reduced price. Furthermore, purchasers may realize that short sales possess an additional advantage over foreclosures, because, unlike a foreclosure, the deal involves minimal risk.
Use a trusted agent
Still wondering what is a short sale? Hope you are answered, but before you close on that deal, whether buying or selling, ensure your agent is a BBB accredited home buyer seasoned with short sales. Due to the sophistication of this kind of agreement, you would never wish to deal with someone unfamiliar with the entire process. As well, ascertain that your agent is ready to collaborate with you on the deal since some brokers won’t like getting involved because of short sale’s poor reputation or due to their previous bad encounters. Not only does short sales earn less a commission, but they also call for more commitment from the agent.