Do you know what is a short sale in real estate? If not, read the whole guide. It will help you understand its different aspects.
Nowadays, we come across many problems. Sometimes, we have to move to remote areas. In some cases, we agree to sell the property of someone in our family members who has recently deceased. Many a reason to bring about an estate sale.
You might have heard of people purchasing the short sale. Aren’t you curious to know “What is a short sale in real estate?” It is always fascinating for me to know about. In this article, I will answer your question, “What is a short sale in real estate?” and discuss more about it.
What is a short sale in real estate?
Seems to be a new term for those who know estate sale. Maybe you have heard it. But, a brief description of it can clear your concepts. This is also rare nowadays due to improvements in the economy of the world. Let me define the short sale.
A short sale refers to selling the property at the price lower than the mortgage loans. In simple words, the homeowners sell their property at low rates. There are might be several advantages and disadvantages.
How does short sale Work?
The short sale is a bit different from the estate sale on which we have several pieces of text. In an estate sale, you make the arrangements and undergo many steps to sell your property.
In a short sale, an investor visits the property and makes a short offer. Upon the agreement, you need to contact the bank for the short sale status. After filling the application, it depends on the bank whether it gives a green signal for loan recoupment or not.
Usually, home sellers can file documents and firms to the mortgage lenders. They can tell the reason behind which they can not fully repay their loans with their authentic problems.
Benefits of the short sale to the home seller:
Quite a good idea to follow when your mortgage amount exceeds the total value of the property. Short sales can back you a lot and give the following benefits.
Better Credit scores:
Personal credit scores are important and better than foreclosure in the case of short sales. This approach helps the sellers hand over the property to the new homeowners quickly. Even a more smooth way to get the new property in less time.
Saving fees:
Are you tired of hiring the agents? It depends on the estate sale company how much it charges you. Moreover, if you carry out the estate sale on your own, it is still problematic. In case of a short sale, you can save your fees. The estate agent’s fees are paid by the bank instead of the home sellers. Therefore, this is a good choice to go for.
Emotional Advantages:
Home mortgages are normal in the United States and one of the most important events in people’s lives. To prevent foreclosure, the person goes for a short sale and avoid emotional attachments with the home. He/She can say “I sold the property simply.”
What are the disadvantages of Short sales?
If you are analyzing the positive side of something, you must know its dark side as well. Here are some disadvantages of short sales.
No profit earned:
In a short sale, you earn no cash. Instead, all the profit is taken by the lenders in return for your loan. So, all of the benefits are taken by the lenders or banks.
Depends on a green signal from the Lender:
I already highlighted this point. Only if the bank or lender allows the short sale to the seller, it is only possible then. If there is a red signal from them, you might not carry out a short sale.
Final Thoughts:
Have you got the answer “What is a short sale in real estate?” There are not many ways when you have a home mortgage and repay the total amount. If you do not have any other choice, a short sale can be the best choice. Compared to foreclosure, it is a better way to choose.
