Does a short sale benefit the buyer?

Rather than continue losing money, or wasting more money on a foreclosure, many banks offer buyers of short-sale properties favorable financing terms to make the sale more attractive. The lender may offer a low interest rate or other buyer-friendly terms to get the property sold and avoid further expenses.

What happens after a short sale is approved by the bank?

After accepting an offer, the homeowner or his realtor must forward the offer to the lender for review. If the lender approves the offer, the short sale moves forward. If the lender does not accept the offer, the buyer may counteroffer or end the process.

Do you still owe money after a short sale?

In California, you can only do so after a short sale, but remain liable for the debts after a foreclosure sale. Thus, deficiency judgments, or these debts you may still owe after your home was sold, can usually be discharged in bankruptcy.

How does a short sale affect the buyer?

Short Sales Don’t Mean a Discount They might give out a loan that is too much for the buyers to handle. When the market finally drops, the owner is left with little equity and a mortgage that a sale will not pay off. Buyers end up owing more on the home than it is worth.

What are the cons of a short sale?

7 Disadvantages of Buying a Short Sale

• Long Process.
• Subject to the Mortgage Lender’s Approval.
• Lender Could Counter, Reject or Not Respond.
• Opportunity Cost.
• Property ‘As Is’
• Is the Seller Approved?
• Lenders Prefer All Cash or Large Down Payments.

Why would someone do a short sale?

A short sale is when a home owner sells his or her property for less than the amount owed on their mortgage. Typically, the bank or lender agrees to a short sale in order to recoup a portion of the mortgage loan owed to them. Short sales are becoming increasingly rare as the economy improves.

Will bank pay closing costs on short sale?

With a more traditional home purchase, you can often negotiate with the seller to have them cover some closing costs. But in a short sale, buyers are rarely afforded this concession. The bank probably isn’t going to pay your closing costs because they’re trying to recoup as many costs as possible on the loan.

How long does it take for a short sale to close?

Mortgage lenders prefer to close short sales within 30 days or less after approving buyer offers. In fact, lenders often push for closing short sales within two to three weeks of sale approval.

How long does short sale stay on credit?

seven years
Because short sales and foreclosures both fall under this umbrella category, most lenders won’t distinguish between the two, and both stay on your credit reports for seven years. Here’s how a short sale works: When you sell your house, all proceeds usually go to the lender.

Does a short sale damage your credit?

The term “short sale” does not appear in a credit report. When you negotiate a short sale, the lender is agreeing to accept less than the full amount owed on the mortgage, and will likely report the account as settled for less than the full balance. With time, the negative impact on your credit scores will decrease.

Can a seller back out of a short sale?

Here are ways a seller can cancel a short sale contract: A seller may decide to cancel the listing, and the listing agent will agree. A foreclosure may take place, preventing the short sale. The seller may be able to accept a higher offer and cancel the first offer.

Who pays closing costs in a short sale?

These seller closing costs include things like property transfer fees, realtor commissions and attorney or title company fees. In a short sale transaction on the other hand, the seller’s closing costs are usually paid out of the money the buyer brings to the closing.

How does a short sale work in a foreclosure?

A short sale is a chance for a lender to receive more than it would have in a foreclosure—but they are not going to want to release any mortgage obligations at rock-bottom prices, either. This is the typical short sale process from the bank’s end of things, once they receive the seller’s package: They acknowledge receipt of the file.

How long does it take to get a short sale done?

This is the typical short sale process from the bank’s end of things, once they receive the seller’s package: They acknowledge receipt of the file. This can take longer than 10 days; sometimes, it is a month or more. A negotiator is assigned, which might take up to 30 days.

Can a buyer buy a house in a short sale?

A short sale is the sale of a house that needs the cooperation of both the mortgage lender and the home seller. A short sale buyer can capitalize on homes that are selling via short sale. Buyers need to realize that short sale homeowners could be very emotional. This is because they are losing their homes.

What happens to your credit after a short sale?

Once approved by the lenders, the short sale can close as soon as the buyer can get their loan approved, funded and closed. What Happens After Closing for the Seller Typically, your credit score will drop by 75 to 200 points after selling your property in a short sale, which is less severe than a foreclosure.