Nov 05, 2018

When it comes to purchasing property, it’s always best to explore other options for a lucrative deal before you decide to fork up the cash for a property. Among these lucrative deals are homes that are available on a short sale and that are viewed as a means for one to get their hands on a beautiful house at half the price.  

Understanding What a Short Sale Is

Before you jump into a short sale auction, a short sale is usually when seller is selling their home, along with the existing mortgage. A short sale is usually initiated when the house losses value, dipping down to around 20% or less. It can also mean that the house’s current owner is unable to pay their mortgage.

Other than deal with a foreclosure, the owner can opt to short-sell their home at a value that is lower than the total amount of the mortgage. The new buyer will then continue making the payments as well as assume ownership of the house once the amount has been paid off.

Why Is It a Good Idea?

For many people, a short sale offers a rather tempting opportunity, similar to shooting fish in a barrel. The following are some of the main reasons why it is a good idea to get your hands on a home through a short sale:

  • You can expect to get a property at a rather good price. Most banks and lenders are motivated to find a new buyer as quickly as possible and they tend to list homes with low prices in order to reduce the amount of time it stays on the market.
  • When it comes to competition, you’re going to be pleasantly surprised. Short-sales tend to take a few weeks or even months to get finalized. For most homeowners, this can be a rather tedious and unnecessary wait so there won’t be a lot of competition for a certain home. 

What Could Go Wrong?

Not everyone is a fan of short sales though and there are certain risks associated with buying a home through a short sale. The following are some of the main reasons why it can be a bad idea:

  • When it comes to agreement, you need to get both the current buyer and the lender on your side. There can be situations where the buyer might agree but the lender won’t. You need to ensure that both parties are in agreement with your offer.
  • Another issue is that it the seller must officially default on the mortgage in order to be eligible for a short-sale. While some sellers try to find a buyer before they announce their intention to short sale to their lender, this often tends to backfire on all parties involved.

At the end of the day, whether you opt to buy a home on short sale is largely up to you. Just be sure to weigh the pros and cons thoroughly before opting for this mode of buying property.  

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