No homeowner, on the signing day for a new home, imagines they will face foreclosure in the future. But the economic downturns, the pandemic, and other factors homeowners dealing with the distressing process of losing their homes. The foreclosure process can be long, stressful, and severely damaging to the homeowner’s savings, assets, and credit. It’s a frightening situation.
However, there is another option for some homeowners. A short sale is a transaction in which the bank lets the delinquent homeowner sell the home for less than what’s owed. The borrower finds an agent and puts the house on the market, often at a substantial discount. This saves the lender the expense of a foreclosure suit and the possible long-term cost of owning a hard-to-sell foreclosed home.
The Short Sale Benefits Over a Foreclosure May Present a Better Option Than Letting Your Home Slide Into the Long, Draining Process of Foreclosure.
1. It Can Protect Your Credit
From a lender’s perspective, it’s better to recover a portion of a mortgage loan than to absorb a total loss. Therefore, in lieu of a foreclosure, banks will often settle for a short sale. This allows both the lender and the homeowner to end up in a better position. And the reduced amount of money owed will ease the burden on the homeowners and not irreparably damage their credit.2. It Can Save You Money
The average legal cost to a homeowner going through a foreclosure is around $7,500, according to the U.S. Congress Joint Economic Committee. Add in the additional costs that can accumulate throughout the sometimes lengthy foreclosure process, which could be just the tip of a burdensome financial iceberg. And if the homeowner is unable to afford payments, the foreclosure could eventually lead to bankruptcy — with has significant credit implications for the borrower and costs for the lender.3. It Can Help Your Lender
Lenders are generally relieved to avoid the legal filings and documentation that go along with foreclosure. However, in opting for a short sale, the lender can recover a portion of the money that’s owed on the property, thus reducing the loss without the extensive legal process of foreclosure. In many cases, a short sale reduces the lender’s total loss to a level where it’s more financially savvy for him to write it off, rather than sue the former homeowner.4. It Can Benefit the Housing Market
Many homeowners have spent years building up equity in their homes, only to watch it vanish as a result of the housing crisis. The housing market has been saturated with underpriced homes due to foreclosures, and finding buyers for many of these properties can be very difficult. Short sales can help resuscitate a neighborhood by making it easier for buyers to get into homes at affordable prices. By giving buyers and sellers an option that avoids the nuances of a foreclosure sale, short sales can reduce the number of excess homes for sale in a neighborhood, in turn reducing the number of unkempt, vacant houses.5. It Presents Opportunities for Agents
A real estate agent who specializes in short sales has found a potentially profitable niche. A real estate agent who specializes in short sales has found a potentially profitable niche. The short sale process may be less complicated than a foreclosure, but it still requires the homeowner to go through a multistep process that’s more complicated than a traditional home sale. The benefits of this work, however, are great: The homeowner will most likely be in much better shape in the long run by opting for short sale benefits over a foreclosure.6. It Can Benefit Investors
The purchase of short sales can be advantageous to an investor in a number of ways. Below-market-value buying prices, competitive selling prices, and easy access to information about the home are a few of the incentives. Plus, the increased popularity of the short sale market can present a wealth of opportunities to an astute investor.7. It Gives Homeowners More Control
Any real estate sale can be somewhat stressful, but a short sale will allow the homeowner to play more of an active role in the process and deal mainly with the bank, the homebuyer, and the real estate agent. Overall, a short sale is much more manageable for the homeowner than being at the mercy of a bank’s attorneys during a foreclosure [source: Foreclosure Questions.8. It Can Prevent Foreclosure
If you can short sell your home before it goes into foreclosure, your credit will take less of a hit. A foreclosure on a home adversely affects the homeowner in a number of ways, and it also has a negative effect on the lender and the housing market in general. The homeowner receives a mark on his or her credit that can make it difficult - sometimes impossible - to borrow money for another home, car, or major purchase. Therefore, if foreclosure can be avoided, it’s in the best interest of everyone involved.A short sale can provide “light at the end of the tunnel” to homeowners and offer them a platform from which to start rebuilding financially. If you’re not sure of how to deal with the challenges involved with home foreclosures, talk to us – CPD Homes, LLC! We are buying houses in Cleveland, and have been helping families and homeowners since 2012. We’ve been working with home sellers dealing with – inherited properties, divorce, behind on the mortgage, major repairs needed, sudden move, or for whatever reasons why homeowners sell their homes, CPD Homes is here to help. We buy houses in any condition and in all price ranges! So call us today to discuss your property at (216) 619-4387 – or click here to drop in your information and we will get back to you with a cash offer! We are here to assist you.
