A Quick Guide To Understanding What A Short Sale Is
There are many reasons why a homeowner may want to sell their home. However, they may also have a mortgage debt that is more than the actual cost of the home. In this type of situation, they may want to consider a short sale. So, what is a short sale real estate and how does this service affect your potential purchase?
The first thing to remember if you are considering a short sale is that you must obtain your lender’s approval first. The lender has to approve the sale because they will be accepting less money than what is owed on the home.
How Does A Short Sale Benefit Sellers?
As previously mentioned, there are several reasons why homeowners may consider short sales, the most common reason is to prevent the home from being foreclosed. In order for them to proceed with the short sale process, the homeowner has to prove that they are facing extreme hardship. The lender will ask for proof that the homeowner is facing financial hardship.
The homeowner must provide proof that that their household income has been reduced so they cannot afford the home anymore, or they must offer proof that they have to relocate due to their job.
Once the short sale has been approved by the lender, the homeowner can list the home with a reputable realtor. All offers must be presented to the lender. Keep in mind, this stage of the process can last anywhere from several weeks to several months.
Do Short Sales Benefit Buyers?
Even though those in the market to buy a home can purchase one at a deeply discounted price during a short sale, the process typically takes longer than a regular home sale.
Buyers must first receive pre-approval from a lender. The pre-approval process will allow you to find out how much real estate you can afford, the amount you will need for a down payment and how much your monthly payment will be.
Buyers who are interested in what is a short sale real estate should also know that as they wait for the sale of the home to move forward, it is imperative that they remain active in the process as well by getting the home inspected, appraised and fulfilling other requirements the lender may have.