What is a Short Sale?
Sometimes things come up that make it impossible to pay the mortgage. If the mortgage is not kept up to date, the bank can foreclose on the property. If this happens, the owner's credit is destroyed, & the owner can be embarrassed. There are other options and one of these is a short sale.
The lender has to agree to the short sale, but if done right the short sale can be the best thing possible under the circumstances for both sides.
When the lender agrees to a short sale, the lender is accepting less than the amount due. This would be because a house cannot sell for the loan amount. In the last several years, the prices of homes have dropped and many people have a loan on a home for more than what they can sell it for. A lender losses a lot to have to go through a foreclosure, so this could be a better option for the lender also.
Be advised, the IRS could consider the dept forgiveness as income. Also, the lender might still come after the owner for the difference-which is known as a deficiency. Owners should contact a lawyer before going forward with a short sale.
Buying a short sale can be a very lucrative option, but it also can be a big pain. The lender is the true owner when it comes to a short sale, so the transaction has to be accepted by the lender. This can be a lengthy process. Sometimes it can take more than 6 months for a short sale to go through. Sometimes the whole transaction is rejected after months of a buyer thinking they were getting the home.
If you are in no hurry to get a home, you can consider looking at short sales, but make sure you have a skilled and knowledgeable real estate agent to guide you through this process. Look for an agent that has extensive short sale experience.