If a homeowner falls behind on mortgage payments and can't keep up with the debt, they either have to sell their home or face foreclosure. Foreclosure can be disastrous to a person's credit history, so they might choose to short sell their home. A short sale is a sale approved by the owner's lender in which they can sell their home for less than what it is worth. While the lender might lose some money, the hope is that they can at least sell the home for most if not all of what they still owe on the home. As a buyer, you benefit in several ways by finding a short-sale home.
You Can Save Money
One of the top benefits to choosing a short sale is that you might be able to get a lower-priced house. The person selling the home is probably in a hurry to get it sold in order to avoid foreclosure. They won't want to wait until they can get what they really want for the house. If you are willing to pay the lower price for the house, and the lender approves the sale, they will most likely go ahead and approve your first offer. It is a great way to get a lovely home while paying a little less than what it's worth.
There is Less Competition
Another advantage to buying a short-sale home is that there tends to be less competition. With a short sale, the process of getting approved by a lender can take longer than usual, and it will require more paperwork. Some potential buyers would rather not go through the hassle and won't even bother with short sales. If you mind waiting a little longer for the final paperwork to go through, you will have less competition and less people bidding on the same home. You have a better chance at your own offer being approved.
You Can Use the Same Lender
If you have good credit and the recommended security deposit, you might be able to use the same lender that currently owns the home you are putting an offer in for. This can make the entire process go much more smoothly. The lender might be more willing to loan you money for this short sale as opposed to other lenders, since they want the house sold quickly. It also helps you decrease how long the paperwork takes to get approved.
Work with a realtor to find short-sale homes in the area you'd like to move to and start exploring!