| Why Foreclosure Short Sales are Good for Homeowners |
Why Foreclosure Short Sales are Good for Homeowners
With today's troubling real estate market, there is good news. That good news is that those in good financial standing are eligible to make a profit. If you have the ability to get a line of credit or the needed financial resources on hand, you can and should profit from foreclosure short sales.
Foreclosure short sales involve buying a home that is nearing foreclosure. At first, many unfamiliar with the real estate market assume this is an illegal or bad practice. It isn't. It is completely legal. In fact, foreclosure short sales are done with cooperation of the home lender! That lender agrees to allow the homeowners to sell the soon-to-be foreclosed on home for less than what is owed on the outstanding mortgage. Why would a lender do this? It minimizes their risk.
From reading or watching the news or watching late night infomercials, you will see it a buyers market. This is particularly true with foreclosures and short sales. Buyers are not only able to save money and turn a profit. Unfortunately, many new to the game make a costly mistake. That mistake is believing they don't have the heart to take a home away from a family. If you are sitting at home thinking about this very fact, but know you want to make money, stick with short sales. As previously stated, short sales are done with the cooperation of both the lender and the borrower. In fact, the delinquent borrower usually makes the suggestion.
Not only is the delinquent borrower usually who suggests a short sale; they are usually the one who benefits the most from the process. How?
They owe less money. With short sales, lenders have the final say in debt forgiveness. Most will consider the situation at hand. If the borrower made poor financial choices, they may be required to pay back the difference. This is done in the form of an unsecured, standalone loan. Yes, it stinks they have to pay money back, but owing $20,000 is a better alternative than having an unpaid $250,000 foreclosure on their credit report.
Mortgage lenders may forgive their debt. As previously stated, mortgage lenders have the ability to forgive debt. With short sales, the loss taken and the causing circumstances influence the decision. Those who suffered financial problems due to costly health complications or job loss are more likely to profit from the sympathy card. If the loss the lender takes is small, such as $5,000, they may be willing to just take the loss.
Their credit history doesn't take a huge hit. When a home enters into foreclosure, that foreclosure stays on a person's credit report for at least seven years. Those who suggest a short sale know the damaging consequences. They may be unable to pay for their children's college educations, purchase a new car if their breaks down, get a good rental unit, or buy a new home. Short sales will appear on a credit report if the lender takes a loss, but many short sale sellers are able to purchase a new home and secure additional financing in less than three years.
As you can see, homeowners can benefit from short sales many ways. The greatest benefit is they get to avoid embarrassing foreclosure proceedings. To most unfamiliar with the process, it will just look like they are selling their home. So, if you want to try profiting from the real estate market, but fear your good heart getting in the way, don't. Target short sales instead. In a way, you are doing the family a favor by purchasing their home.
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