If you’re looking to purchase real estate, you may be interested in a short sale. This occurs when the seller is trying to avoid foreclosure or similar actions. They may be underwater on the house, meaning they owe more on the loan than the house is currently worth. The seller simply wants to get out of the property without the lender reclaiming it, so they obtain permission to sell it for less than the loan balance.
There are some advantages here for the mortgage lender. Primarily, they still receive a bulk payment when the property changes hands, whereas the previous property owner might never have repaid that loan. A short sale may also be faster and more efficient than going through the entire foreclosure process. But what are some of the benefits for the buyer?
Financial advantages
There are practical advantages, such as the fact that the property may be in better condition than it would be after a foreclosure. The seller didn’t have to be forcibly removed and sold the house intentionally, albeit begrudgingly. However, most of the benefits are primarily financial in nature.
For instance, the lender may cover various costs, such as closing costs, which can help the buyer save money. The buyer also doesn’t have to haggle with the seller over who is responsible.
Additionally, the sale price might be below market value. After all, the lender’s goal is simply to recover what they can from the property and eliminate a problematic loan. They’re not necessarily concerned with the buyer paying 10% under market value. For a buyer, whether purchasing residential or commercial real estate, this can be a significant financial advantage that saves a substantial amount of money.
Short sales can be more complex and come with their own rules, so it’s crucial to understand the steps involved. Working with an experienced legal team may be helpful.
