The number of short sales on the market seems to rise every month as the prices of homes continues to move downward. Many buyers are under the impression that by buying a home through a short sale they are getting a real bargain. This is not necessarily the case however. The only reason it is classified as a short sale is due to the fact that the sellers owe more to their lender than the home is presently worth in the current market. Thus, for buyers, you are probably buying at the current market price. The downside you must consider is the extended time it takes for the existing lender approve the sale. Many of my clients are unsure as to whether to lock in their mortgage rate since there is no guarantee as to when their short sale may be approved by the seller’s lender, if it will be approved at all.
As for sellers the benefits are clearer. Sellers who are able to sell through this process are able to prevent the foreclosure of their home. A foreclosure has a more detrimental impact on the credit score of a seller than if the property is sold by short sale. Furthermore, the time one must wait before being able to purchase again is 2 years if a short sale is accomplished as opposed to 7 years if the seller is foreclosed on.
Whether you are considering to buy a property that is a short sale or are a seller considering whether to sell your home for less than you owe to your bank, you need to know the benefits as well as the disadvantages of how the transaction may affect you. In recent months lenders have become more receptive to this alternative rather than foreclosure. The main reason for this is due to the discovery a few months ago that many lenders do not have their collateral documents in order. This is good news for both buyers and sellers of short sales.
If contemplating a short sale, make sure you hire an attorney with experience in all the current issues surrounding this evolving and fast changing segment of the real estate market. The Law Office of William J. Reinhardt, Jr. has been representing both sellers and buyers on short sale transactions throughout this real estate crisis. Contact me at 718-377-8880 or at firstname.lastname@example.org for a free consultation to discuss your transaction.