Get HAFA Short Sale Agreement Form (Form 184) - Short Sale Shop

The cons of buying a short sale The approval process can be long and frustrating. Short sales are not short. The process requires that all lenders review the short sale and they must approve the sale. This can lead to a long time period with no guarantee the sale will be approved.

A short sale, or a quick sale, is when a homeowner decides to sell the property for an amount significantly lower than the mortgage debt. In many cases, homeowners struggling to keep up with their mortgage payments want to avoid foreclosure and often prefer a short sale.

The seller needs to show some sort of hardship. If they can prove that they can't keep making mortgage payments and will eventually default, the lender is more likely to agree, especially if the lender doesn't want to go through the foreclosure process and then sell the home on its own.

Banks can potentially lose money on foreclosures due to the costs associated with the foreclosure process, such as legal fees, property maintenance, and potential decline in property value. Additionally, the longer a property remains in foreclosure, the higher the potential losses for the bank.

Most foreclosed homes usually need substantial repairs. Therefore, banks sell them cheaply to avoid being landlords of distressed houses. This attracts house flippers known to buy cheap foreclosed homes at low prices that can fetch a decent profit after making repairs.

Short sales tend to be lengthy and paperwork-intensive transactions—sometimes taking up to a full year to process. The pre-foreclosure process can also be quite lengthy, but once the lender has seized the property, the sale usually happens very quickly so that as much money as possible can be recouped.

A short sale in real estate is an offer of a property at an asking price that is less than the amount due on the current owner's mortgage. A short sale is usually a sign of a financially distressed homeowner who needs to sell the property before the lender seizes it in foreclosure.

Short sales give people the option to repurchase another home fairly soon; foreclosures have a much more negative impact on a borrower's credit score .