Short sale seems like a promising investment. They are cheap and you can choose from the many options available to you. This is made possible by the many homes in the verge of foreclosure. Although this is the case, you cannot be certain to land a good deal after purchasing the property. You may encounter several problems and you might even regret purchasing a short sale. To prevent this, you have to be cautious and know what you are getting into.
What is a short sale? A short sale happens when the lender agrees to receive lesser amount for the loan balance of the home owner. This takes place when the value of the home is less than the price of the loan balance. Before the lender approves this, the borrower should qualify first. He has to submit requirements for the said purpose.
There are certain aspects of the short sale that the buyer should understand but he is not the only person who should be careful. The seller should be cautious as well. The sellers have to learn about how the short sale will affect him after. What will it do to his credit score?
If you are the buyer, you should know that you have to make an offer first. This is because it is a part of what the lender requires. Even if lenders have different manners of processing short sales, all of them will need a hardship letter and an offer for the property. You have to make an offer so that the seller will have something to show the lender for approval.
Even if you made an offer, do not expect to own the house as there are a lot of things that can still happen. Your offer is used as one of the requirements of the seller to qualify for the short sale. This does not guarantee that he will get an approval. You also have to bear in mind that in some instances, the property is still included in the active list of most real estate agents. The property will still attract potential buyers because of this. Since this is the case, there is a chance that you will not end up as the property owner.
Aside from the buyer, the seller has reason to be cautious as well. This is because a lot of people can take advantage of them. There are players in the market that will harass them and pressure them to sell the property for a cheaper value so that they can purchase it for a low price. Once they succeed, they will modify the property a bit and will sell it at a higher price.
A short sale can help the buyer and the seller. However, they have to be careful and know what they are getting into. This can help the buyer own a home because of a cheap value but this will not guarantee them that they will own the property after making an offer. This is a relief for the seller but he has to be careful with the other players in the market to avoid problems.
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