What does a short sale mean for the buyer?
Written by. Sarah Davis. A short sale is a real estate transaction where the owner’s lender agrees to accept a purchase offer from a new buyer, short of what is owed by the original owner. This could be great for you, the buyer, but it could take a long time to move into your home.
Is it a good idea to buy a short sale house?
The biggest benefit to buying a short sale home is the chance of finding a great deal. And unlike with a foreclosure, a short sale home is likely to be in good condition. Often, the current owner will be still in residence and keeping up basic maintenance. A foreclosure, by contrast, might be in disrepair.
What is a short sale and how does it work?
A short sale is a transaction in which the seller does not actually own the stock that is being sold but borrows it from the broker-dealer through which they are placing the sell order. … Short sellers aim to sell shares while the price is high, and then buy them later after the price has dropped.
Why is a short sale bad?
If you’re a seller, a short sale is likely to damage your credit — but not as badly as a foreclosure. You’ll also walk away from your home without a penny from the deal, making it difficult for you to find another place to live. However, a short sale can forestall foreclosure and its negative impact on your credit.
Who benefits from a short sale?
For the seller, a short sale presents less damage to his credit report than a foreclosure, and allows him to recover and buy a new house more quickly. This sense of cooperation between the seller and buyer may facilitate the exchange and get the new owner into the house more quickly.
Can you negotiate price on short sale?
Can You Negotiate A Short Sale? It is entirely possible to negotiate a short sale, but doing so can be a time-consuming process. Instead of negotiating with the seller alone, as is the case with most traditional sales, short sale negotiations must be approved by the lender, too.
Can I finance a short sale?
A short sale is a foreclosure prevention method. Unlike a foreclosure, the property is still owned by the seller. If you need a home quickly, a short sale may not be the right option for you. … Financing a short sale is possible, provided you and the lender are willing to wait.
Is short sale cash only?
A short sale means they won’t earn any profit from the sale of the house – the bank or mortgage lender gets all the sales proceeds.
Can you pay cash for a short sale?
Having all-cash when buying a home is always preferred, but especially preferred when buying a short sale house, experts say. Cash can especially help if the appraised value comes in lower than the price, says Ken Sama of the The Millennium Consulting Group in Las Vegas, which specializes in short sales.
Who pays realtor in short sale?
While a seller typically pays all real estate agent commissions and other closing costs, in a short sale the seller pays nothing; the lender or bank foots the bill.
Can you buy a short sale with an FHA loan?
A short sale occurs as a compromise between a seller and her own lender. A seller who cannot make payments must face foreclosure or an alternative change in the loan. … However, there is little preventing a buyer from using an FHA loan to purchase a short sale house.
How long can a short sale take?
A short sale can take up to six months to be approved because many factors can slow the process down. You might be able to reduce the time it takes to be approved by asking your agent for some information before making an offer.
Do Banks prefer short sales or foreclosure?
Increasingly, banks are offering struggling homeowners wads of cash to allow their homes to go into a “short sale” and avoid foreclosure.
What are the pros and cons of a short sale?
The Pros and Cons of Buying a Short Sale
- Short sales can take a long time. …
- They are sold as-is. …
- Make sure the lower price is really worth it. …
- The good deal factor can be influenced by the market conditions. …
- Less competition. …
- Don’t overlook needed repairs. …
- Home inspections are a must.
How do you make an offer on a short sale?
How to Make a Short Sale Offer
- Offer a Strong Earnest Money Deposit.
- Check the Comparable Sales.
- Don’t Ask for Special Reports or Repairs.
- Give the Bank Some Time.
- Assure the Seller You’ll Wait.
- Offer to Pay the Seller’s Fees.
- Shorten Your Inspection Period.
- Provide a Strong Preapproval Letter.