• What Are the Advantages of a Short Sale?

    What Are the Advantages of a Short Sale?When a borrower has defaulted on his mortgage payments, the lender may agree to approve a short sale. In a short sale, a homeowner sells his house for less than the amount still owed on the mortgage. The biggest advantage of selling a home through a short sale is that the homeowner avoids foreclosure. Both foreclosures and short sales can harm a homeowner’s credit score, but a foreclosure can be far more damaging. A short sale is a form of debt forgiveness while a foreclosure is not. It can take up to seven years to recover from a damaged credit score after a foreclosure, and some people never completely recover.

    From the borrower’s perspective, avoiding foreclosure is the most obvious reason to opt for a short sale. But the lender also has several incentives to engage in a short sale and avoid foreclosure. Short sales in lieu of foreclosure may be a more efficient, financially advantageous, and conflict-free method of dealing with a defaulting homeowner.

    Recouping costs. A short sale may be the most economically sensible option for a lender. Once a short sale occurs, the borrower has already missed several mortgage payments and is usually unable to make future payments. If the lender sells the home in a short sale, it can be certain to recover at least some of its costs, even though the home will be sold for less than the amount outstanding on the loan. In many cases, this is a superior choice to foreclosure because foreclosure can be a costly process. Foreclosure could impose eviction costs, expenses related to rehabilitating the property, and maintenance costs while waiting for a buyer to purchase the property.

    Motivated Parties. In a foreclosure, a lender can encounter various problems with the homeowners. Owners may refuse to vacate the premises until the lender initiates eviction proceedings. Some homeowners intentionally cause destruction to the house and the lender then needs to make repairs to market the house for resale. Therefore, both parties may be incentivized to cooperate to complete a short sale.

    Low costs for potential buyers. Another party that benefits from the approval of a short sale is a potential home buyer. When the lender sells the home at a price below the loan amount, some buyers may be able to afford a home that otherwise would be out of reach. Buyers can get an even better value for their money if they agree to purchase a home in a short sale that requires extensive repairs and renovation.

    The experienced team of attorneys at the Law Offices of Mark Weinstein, P.C. can help you litigate your real estate claims. Contact Mark Weinstein and his colleagues at (770) 888-7707 or visit them at http://www.markweinsteinlaw.com to find out how they can advise you.

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