If you tell any of your friends that you are buying a short sale, they will offer you sympathy. Or, some of them might laugh at your misfortune. While most people focus on the drawbacks of buying a short sale, it has many benefits. Before we discuss the benefits, first let us know what a short sale is and how to do it.
What is a Short Sale?
When homeowners sell their property for less than the amount owed on the mortgage, it is called a short sale. The lender agrees to a short sale to recoup the mortgage loan owed to them. You can read more to know about what is a short sale in NJ.
How to make a Short Sale?
In this process, a home seller puts the property on the market and designates the home for sale as a ‘short sale’ deal to the potential buyers. When the buyer agrees to make a short sale offer, the owner will contact his/her bank and completes the application.
Though there is no guarantee that the bank will accept the application, a short sale eliminates the headaches associated with a mortgage loan; for example, the lender or bank gets a portion of the loan repaid.
Below are some of the benefits a short sale offers to the buyers-
Offers Credit Score Advantages
From the personal credit score point of view, a short sale is preferred over a home foreclosure. The credit scoring firms view the foreclosure and offer a credit score lower than when the seller turns to a short sale instead. Not only it helps protect the credit score, but it also enables the homeowners to buy another home.
A foreclosure comes at a high cost to a homeowner. The lender needs to pay all the costs associated with the foreclosure, including the ones related to evicting the current owner and administrative costs. After the home is empty, the lender has to pay for the repairs and maintenance costs when the home is on the market.
In order to avoid spending money on these things, lenders may want to sell the property for an amount under the value of the loan. It provides the buyers with an opportunity to get a good deal they would be unable to afford otherwise.
Offers Savings On Home Sale Fees
In a traditional home sale, the home sellers have to bear additional fees and charges, such as real estate commissions. However, in a short sale, these commissions and fees are paid by the lender or bank.
Provide Emotional Benefits
A home mortgage is perhaps the biggest financial event of someone’s life, especially before retirement. With a short sale, the seller can avoid stressful scenarios associated with the foreclosure. They can honestly say that they have sold their house and moved on.
These are some of the many benefits a short sale offers to the potential home buyers.