Is buying a house on short sale a good idea?

Is buying a house on short sale a good idea?

In short, short sales are a good idea if you have plenty of time and money. A short sale buyer may get the property at a reduced price, but the property (in all likelihood) has its share of problems — think “fixer-upper” — and the deal needs to go through considerable red tape to make it happen.

What is the downside of a short sale on a home?

Disadvantages of a Short Sale A short sale comes with quite a few catches. There are more parties involved than a typical sale making the process complicated and often lengthy. In a traditional home sale, price negotiations happen between the buyer and seller (or their representatives), not the seller’s bank.

Is a short sale bad for the buyer?

Short sales are a mixed bag for the buyer, the seller and the lender. 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.

What is a possible consequence of a short sale?

Mortgage Cancellation If completed, a short sale allows the property owner to save on the cost of the mortgage. But a short sales results in a loss on the loan, and the end of interest payments and servicing charges that represented the lender’s profit.

Is it better to do a short sale or foreclosure?

Short sales are less damaging to a credit report than a foreclosure. A foreclosure is when a home is seized and put up for sale by the investor or bank. Every mortgage contract has a lien on the property that allows the bank to control the property if the homeowner stops making mortgage payments.

Why are short sales so difficult?

Short sales happen because the loan on the property is larger than the sale price minus all the sale expenses. With a short sale, the seller is asking the bank to take less than the amount owed. The seller’s bank must approve the sale, and this is where the big delays can happen.

Will the bank take less on a short sale?

If the list price is too low, the bank will reject the short sale; a low list price could be a strategy used by the listing agent and seller to entice multiple offers on the short sale. The short sale bank will hire a Broker Price Opinion agent and pay that agent less than $100 to produce a BPO.

Is it better to buy a short sale or foreclosure?

Buying a foreclosure typically is faster than buying a short sale, and an investor can buy a home for rock-bottom dollar. The national average of a foreclosure that needs some work may cost around $107,600, according to Re/Max. The investor could rent out the home or resell it after fixing it up.

Why would a short sale be denied?

A short sale is sometimes denied due to something as simple as the seller being current on paying their mortgage. The bank’s guidelines might state the bank isn’t allowed to approve a short sale if the mortgage payments aren’t in arrears.

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.

Will a bank accept a short sale offer?

Many underwater sellers are worried that their banks may reject a short sale when the truth is, if the seller and the property qualifies, most banks will readily approve a short sale.

How do you get a short sale approved?

If the seller can show the bank that a short sale is a better option than a foreclosure, then the bank will approve it. That is typically how you get an approved short sale.

https://www.youtube.com/watch?v=32MJig6oWNE