What Is a Short Sale?
What is a short sale in real estate? A short sale is defined as: the sale of real estate property, which falls short of the balance owed on the loan. The situation usually happens because a borrower cannot pay the mortgage loan on their property. The lender understands this and decides that it has more to gain by selling the property at a moderate loss rather than exerting pressure on the borrower. If both parties can consent to the process of “short sale” they can both avoid foreclosure, which is a loss for everyone.
Why does the bank want to avoid foreclosure? Because the foreclosure process brings along high fees for the bank, not to mention a lot of hassle. Borrowers want to avoid foreclosure because of the damage it will do to their credit report.In essence, this is a process that saves both parties from the trouble of foreclosure. In the end, everyone just wants to count their losses and move on without getting backed up in miles of tape and paperwork.
Now we come to the question of, why you would want to buy a short sale home in Phoenix? Because the lender will usually sell the property for less money than the full balance of the loan. This price, in theory, is much lower than foreclosure price or even bank owned property price. A homeowner would sell the mortgaged property for less than the outstanding balance and then give the proceeds of the sale straight to the lender. The homeowner gets to move on and find another house, with credit in tact, while the bank incurs a smaller financial loss. This process is faster and cheaper than other options.
What is the difference between a short sale and a foreclosure? A short sale is a process that dismissed the homeowner and pays off a portion of the balance owed to the lender. A foreclosure is a much less cooperative solution. Essentially, with a foreclosure property the bank forces the homeowner out because of non-payment. A foreclosure is a last resort—something the bank does to recuperate even a small portion of its investment. In terms of short sale vs. foreclosure, homeowners are advised to seek out short sales instead of going along with a foreclosure. The benefits of a short sale are: more control (over money and who gets the house) and no bad credit report.
You may also be wondering how to sell your home on a short sale. It is best to first talk to a lawyer regarding your options and then start negotiating with the lending company. You may also ask for the assistance of a real estate agent. Call The Holm Group today at 480-206-4265. These experts represent short sale real estate in entire valley area and focus on Scottsdale property. Start searching for a short sale home in Phoenix, AZ right now!