A short sale is selling a house for less than the outstanding mortgage on it. It is a financial option for the homeowner who is distressed on his mortgage payments.
A short sale is done by the homeowner when the value of a home drops down. The lender like Bank needs documentation before signing to a decision of short sale. The documentation must include the explanation that makes sense for executing the property for short sale. Although short sale might be Lengthy and requires a lot of paperwork. You can find more information on the Short Sale Blog. After approving the negotiation takes place between the buyer and the homeowner. A Short sale tends to be the helpful option for the homeowner.
There are certain benefits of the short sale as following:-
1) The bank may release you from debt; however, it may not fully forgive the amount you owe. The lender may hold your accountable awe and pay the amount in installments.
2) For a lender, it would be a better option to recover the portion of a Mortgage Loan then to face a total loss. If the homeowner is not being able to pay the mortgage amount completely then Bank May file a lawsuit against him. Therefore to avoid such illegal complaints, short sale proves to be a better option.
3) Foreclosure process may bring the homeowner into trouble. If the homeowner is unable to pay the mortgage amount may be due to business loss, divorce or any other issue then he has to go through the foreclosure process which in turn will lead to Bankruptcy. Mortage lenders may not always file for the deficiency judgment in a foreclosure case. The new buyer may agree to pay some amount of mortgage.
4) After the closure is moved to court, various hearing and documentation take place which in turn increases the amount to be paid by the homeowner. Selling a property is also a time-consuming process and therefore it may create a burden on the homeowner. In short sale, the lender can recover some amount and reduce the loss.
5) It is beneficial for the buyers who are willing to buy property at affordable prices. Short sales can help home prices from falling to very low levels. The short sell process is not as tedious as Foreclosure. It lends a helping hand to the homeowner who is unable to pay the mortgage amount.