Buying A Short Sale Home
The messages are mixed concerning our economy and the housing market. Doubtless, in some areas home sales are rising along with prices. Regrettably, many areas are still experiencing the housing bust. Conversely, prices are not likely to go much lower. It will be a trade off if you are selling a home as you can expect to sell at a lower price as well. Unfortunately, many people bought at the top and are selling at the bottom. Families are losing their homes due to unemployment, inflation, and over extended credit lines. This is sad news for a lot of people, and, when it becomes personal, it is even more tragic. Nevertheless, some people are benefiting from the market today. Many families are able to purchase a home by taking advantage of a recessed market and tax credits extended by the national government. When a family realizes their dream, one cannot help but share their joy. One strategy that is helpful to both over encumbered homeowners and budget conscience buyers is a short sale.
A short sale is when the lender agrees to accept less than the existing mortgage. To begin, sellers make a hardship case to the lender. Hardships include job loss, catastrophic illness, death, divorce, and bankruptcy. Remember banks have a bottom line, and it may not make sense from their standpoint to settle for less money. Payment history, mortgage vs. equity, and area comps are considered. Depending on the owner's financial statement, lenders may expect the difference to be paid from personal funds. Sellers must secure a buyer, buyers have to be qualified, and the process can take many months. The lengthy period often results in foreclosure, and it's common for buyers to 'fall out'.
A short sale will affect a seller's credit report. Experts agree that before deciding on a short sale, you should seek legal advice from a competent real-estate lawyer or an accountant. A short sale may not be as detrimental to your credit standing as a foreclosure, but there are ramifications. For buyers the process is rife with loopholes and complications. Banks may wait for multiple offers before accepting an offer, and buyers won't know the number of offers being considered or the amounts bid.
A short sale is not without problems for both sellers and buyers; however, it can be the best solution to a dilemma many families face today.