An Arizona resident who is considering purchasing a home in a short sale real estate transaction, or a buyer who hopes to sell his home through a short sale, may be interested to learn the pros and cons of such a transaction before proceeding. A short sale is a transaction in which a bank agrees to the sale of a home for less than the amount that a homeowner owes on his or her mortgage. The transaction is an alternative to foreclosure proceedings for both the homeowner and the bank.
There are pros and cons to a short sale. On the positive side, a short sale transaction can allow a buyer to get a great deal on a property if it is sold at a below-market price, as may occur in a short sale transaction. For a seller, a short sale transaction can have great value because it allows a homeowner to avoid foreclosure. For potential buyers, the property at issue may be better maintained than one purchased at foreclosure, as often a homeowner is still living in a short-sale property, and therefore maintaining it. Foreclosure properties, on the other hand, may have a higher likelihood of being ransacked.
One major con to a short sale is the length of time such a sale can take. Buyers and sellers are at the mercy of the bank, and banks may take months to provide an answer on a proposed short sale. Then, despite an agreement with a lender, a final sale may still fall through after a great deal of time has been invested.
There is no clear answer regarding the pros and cons of short sales. They may make sense for certain buyers or sellers in particular circumstances. A buyer or seller interested a short sale agreement may find that he or she can benefit from legal counsel regarding the best strategies for pursuing such a transaction.
Source: investopedia.com, “Purchasing a Short-Sale Property,” Amy Fontinelle, accessed Jan. 15, 2016