How Do Short Sales Benefit Both Buyers and Sellers?
Short sales can be beneficial to both buyers and sellers. Here’s how.
How do short sales benefit buyers and sellers?
First, let’s recap what a short sale is: A short sale is when a homeowner owes more on the property than what it’s currently valued at.
From the buyer’s standpoint, it’s beneficial because you’re getting a property for 15% to 20% below market value since it’s labeled as a “distressed sale.” You’re also basically walking into equity, and because the home’s already been lived in and cared for, it’s usually a warm, easy sale. The only reason sellers conduct a short sale is because they can no longer afford their property.
For these reasons, a short sale is a great option for first-time buyers, especially. Keep in mind, though, that these sales take longer than regular sales, as the negotiation period lasts anywhere from three to six months.
How are they beneficial to sellers? In Rhode Island, if you can no longer afford your mortgage and you decide instead to foreclosure or do a deed in lieu of foreclosure, the bank still has a right to come after you for that deficiency for a period of 10 years thereafter.
When we conduct a short sale, we sell your property and turn the file over to an attorney who negotiates on your behalf. The bank then pays for all of your attorney fees and any back taxes on the property. At the end of the transaction, all you need to pay is the water and sewer bill.
The attorney also tries to get a full release on the property for you, so you’re typically able to purchase another property within two and a half to three years.
If you have any more questions about this or any other real estate topic, don’t hesitate to reach out to me. I’d be happy to help you.