Why is a short sale bad?

If you’re a seller, a short sale is likely to damage your credit — but not as badly as a foreclosure. You’ll also walk away from your home without a penny from the deal, making it difficult for you to find another place to live. However, a short sale can forestall foreclosure and its negative impact on your credit.

Are short sales hard to buy?

Short sale homes can be hard to find In order to need a short sale, a homeowner must have negative equity — meaning the home’s mortgage balance is higher than the property’s value. After the housing market collapse that started back in 2008, a lot of homeowners found themselves underwater on their mortgages.

What is the downside of a short sale on a home?

Disadvantages of a Short Sale A short sale comes with quite a few catches. There are more parties involved than a typical sale making the process complicated and often lengthy. In a traditional home sale, price negotiations happen between the buyer and seller (or their representatives), not the seller’s bank.

How often do short sales get approved?

Some banks get approvals in less than 30 days, while other banks’ short sales can sometimes turn around in 24 hours.

Can you negotiate a short sale?

The answer is an emphatic “Yes!” It is very much possible to negotiate a short sale. However, short sale negotiations are usually more time-consuming and more complicated compared to traditional sales. This is because short sale negotiations have to be approved by an additional party – the lender.

Will a bank accept a short sale offer?

Bank Acceptance Many lenders only accept short sale offers that approach the fair market value of the property, so a bank may decline a significantly lower offer, even if the homeowner has already approved the offer.

Who pays closing costs in a short sale?

In a short sale transaction on the other hand, the seller’s closing costs are usually paid out of the money the buyer brings to the closing. Normally, the seller’s lender must approve all of these seller closing costs before a short sale can be approved and completed.

How can I speed up a short sale?

Speed up your short sale closing date by making your offer as free of contingencies as possible. Submit your mortgage approval with the offer. Contribute a substantial deposit to show your good intentions.

How fast can a short sale close?

Mortgage lenders prefer to close short sales within 30 days or less after approving buyer offers. In fact, lenders often push for closing short sales within two to three weeks of sale approval.

What is a reasonable offer on a short sale?

It’s best to strike a balance between what’s a good deal for you and what’s reasonable for the lender. A price that’s 5\% to 10\% below market value is typically a good number to put on the table. Venturing further down could be dangerous territory.

Why do short sells get rejected?

A short sale happens when a lender sells a home for a price that doesn’t cover the mortgage plus the cost of selling the home. Banks may reject offers when the price is low, the seller or buyer doesn’t qualify, the application is incomplete, or the loan has already been sold.

Is it better to do a short sale or foreclosure?

A short sale transaction occurs when mortgage lenders allow the borrower to sell the house for less than the amount owed on the mortgage. The foreclosure process occurs when lenders repossess the house, often against an owner’s will. Furthermore, a short sale is far less damaging to your credit score than foreclosure.