Are you a hopeful buyer seeking reasons to push through with a short sale? Tell anyone you know that you’re thinking of buying a short sale, and you’ll probably get shaking heads and offers of sympathy. The reactions are inevitable. The fact is, almost everybody knows somebody who faced difficulties trying to purchase a short sale.
But what IS a short sale? A short sale refers to a real estate transaction that involves a financially distressed homeowner selling their property for less than the amount due on the mortgage. All the proceeds from the sale will go to the lender with two options available– forgive the remaining balance or go after the homeowner through a deficiency judgment, which requires them to pay the lender all or part of the difference.
And contrary to popular belief, there are benefits to buying a short sale that people don’t know about. And we’re here to show you the upside of choosing a short sale over a foreclosed home!
Here are nine benefits of buying a short sale.
Cooperative homeowners
Unlike with foreclosures, short sale sellers are motivated to work with their buyers, as it’s their last hope of avoiding foreclosure. It means you’ll have an easier time negotiating than with a seller who plans to get top-dollar in the traditional market. Furthermore, short-sale buyers wouldn’t have to deal with angry homeowners who cause deliberate damage to the property before they leave.
Finding a bargain
Getting a house below fair-market value sounds like a dream, doesn’t it?
Short sale investment opportunities provide buyers with a great deal. Like foreclosures, short sales are not only offered below market value but at a deep discount, too. However, note that many short sales require the buyer to perform some maintenance and repairs, so be sure to include these future costs in mind before proceeding with the sale.
Getting more out of your budget
Finding a good deal on a home means you can get more house for your budget! A short sale may even allow you to buy a home in a neighborhood that you wouldn’t otherwise be able to afford, and a bigger one, might I add! To put it simply, you’ll be able to buy more and get more bang for your buck!
A quick and easy equity
A traditional sale requires a rising market value for equity. On the other hand, A short sale is a faster way to equity. However, you’ll need to do major repairs to most short-sale properties, but the equity can come from you if you can do some of the work yourself. A properly-planned short sale will result in a healthy equity spike once the deal and the repairs are completed.
The home is in a better condition
Although some short sales are not fully updated or ready for sale, they’re likely to be in a better condition than foreclosed houses. They’re often still occupied since the homeowner currently owns the property and NOT the lender, which means they haven’t been squatted, burglarized, vandalized, or flooded for weeks without anybody noticing — and the condition is probably OK.
You can get a home inspection
Did you know that you can get a short sale inspected? So, if you plan on going the distressed route, a short sale feels like a less risky option, with more data points around the home’s condition available to the buyer.
Less competition
It’s not uncommon to have lesser competition for short sales. You won’t have to worry about other buyers swooping in and disrupting your deal, which can add a lot of stress to a traditional sale in a hot housing market. More options for you then!
Expectations are set
A foreclosure is a riskier way to bag a bargain for buyers, as the homes can be trashed by former owners when they go into foreclosure, or they may flat out refuse to leave, in which messy legal proceedings will be carried out. In a short sale, the seller is selling their home willingly and is more likely to leave it in good condition. You can also request a home inspection, so you’ll likely be able to set the right expectations for your new house.
Great financing terms
With a short sale, it’s the lender’s best interest to sell the home rather than let it go into foreclosure. And while they’d rather not lose money, they may offer the buyer more attractive terms, such as lower interest rates or more flexible conditions to sell the property and avoid additional costs.
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