Short Sale Foreclosure: A Good Opportunity For Home Buyers

Purchasing properties through short sale enclosures is very beneficial and an attractive option to the investors because you get the property at a discount rate. You can negotiate the price as the seller desperately wants to sell the property. You can get the property for less than the market price. It also helps you to avoid the pressures and extra paper works involved in purchasing properties through real estate foreclosures.

Understanding what is short sale!
When a borrower mortgages his property for a huge amount and he his unable to repay back the loan, then the loan amount plus interests become outstanding. Usually this leads to real estate foreclosures, where the lender can either claim the property or sell it. To avoid this foreclosure, sellers are now turning to short sale.

Here, even if the outstanding loan amount is high, the seller arranges with the lender to accept a price which is less than the amount he owes to the lender. Taking into consideration the financial difficulties of the borrower, the lender might accept the price that is less than the total outstanding loan amount. The lender has the right to agree or disagree to the offer and not all lenders accept short sales. The seller has to furnish proof if his financial situations like income proof, bank statements etc. The negotiation is done through the banks loss mitigation department. The seller then sells the property for a less price and the entire amount his handed over to the lender. Sometimes the seller agrees to forgo the balance loan amount, but sometimes there is a deficiency balance for which the borrower is still liable. Short sale is actually discounting a loan.

Short sales are beneficial to the seller because he can avoid a foreclosure. Whereas he would have lost everything in foreclosure, in a short sale sometimes he might be able to make some extra money on the deal.

For the purchaser, he gets a property for a low price. If the property is in bad condition, he gets for a lesser price.

As for the lender, he gets his loan paid off, which otherwise is a financial burden. Also the lender saves costs which he would have to incur if there was a foreclosure and the property has to be auctioned.

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