Short Sales benefit the Seller, the buyer, and the lender.
- Seller is relieved of a debt without filing for bankruptcy which allows for a lesser negative impact on their credit report then a foreclosure would have.
- Buyer is able to purchase the property at a reduced cost. (recently this has prompted many investors to target short-sales instead of foreclosures Wealth Realty common real estate myths )
- The lender (bank) is able to recoup a significant portion of their capital without the risk and cost of foreclosures.
Short sales are not without risk however.
- Short sales are not usually approved without the buyer being in default for at least 30 days. Because of this The sellers credit will take a significant decrease in total score and negatively effect his chances of being approved for another loan in the future.
- Short sale offers are all subject to bank approval. This means that if the bank does not accept the offer, that they may still proceed with the foreclosure proceedings.
- Deficiency judgements are the legal right that the lender has to reclaim the difference between the sales price and the amount owed on the loan. The mortgagor may put in place a lien on other properties or assets if available.
- Short Sales are often a lengthy and slow process. For these reasons it is especially important to work with a qualified short sale agent.