A short sale occurs when a homeowner owes more than whatever the house may be worth. While the bank sees this as a loss, this is a much better transaction compared to a foreclosure and can be a beneficial transaction for all parties, including potential buyers of the house. In this article, we’ll be discussing the pros and cons of a short sale homeowners should know.
Pro: Peace of Mind
You may find yourself facing significant financial difficulties that can take an emotional and mental toll on you and your family. Securing a short sale means you no longer need to worry about making your next mortgage payment. Instead, you can start the tough work of figuring out what you will do after you’ve offloaded your property.
Pro: You Avoid Foreclosure
A foreclosure happens when the owner fails to pay the outstanding debt of the property. As a result, the owner gives up all rights to the property. This is one of the evident advantages of short-selling your home—you avoid the frustration and inconvenience that a foreclosure causes. You also take much less of a hit on your credit, allowing you to secure a new home in the future much more quickly.
Con: It Can Take a Prolonged Time To Sell
Despite what the name suggests, a short sale is not quick. There’s generally a process where the bank must first approve the offer. You need to be able to prove you’re experiencing hardships that qualify you to your lender. Then, you must wait for a buyer to get approved.
Con: Home inspections Are Necessary
Remember what we said about the time-consuming procedure of a short sale? Home inspections can take a large part of that time. You must ensure your buyer completes the sale, so you can’t give many reasons for them to walk away. You may need to start diverting money you’d otherwise start putting towards mortgage payments into home repairs.
These are some of the most significant pros and cons of a short sale that homeowners should know. While you should try to avoid performing a short sale, you never know when financial hardship will make it difficult to make mortgage payments. It’s important to know you have a backup plan in case anything like this happens.
Should I do a short sale?
You may find yourself facing significant financial difficulties that can take an emotional and mental toll on you and your family. Securing a short sale means you no longer need to worry about making your next mortgage payment. Instead, you can start the tough work of figuring out what you will do after you’ve offloaded your property.
