Some homeowners in California may benefit from going through a short sale. Short sales occur when owners sell their homes for less than what they owe on their mortgages. These tend to occur during economic downturns such as the Great Recession. When a buyer makes an offer on a home, the owner asks the bank to approve the sale. The bank will ask for evidence that the seller cannot repay the loan in full.
Furthermore, the bank will appraise the home to determine its value compared to what the property owner is willing to pay. It is important to note that there is no guarantee that the lender will agree to the short sale. However, it can be beneficial to lenders as getting some of the loan is better than potentially getting nothing at all. From a credit standpoint, a short sale is typically preferable to a foreclosure.
It may also be possible to save on fees and commissions that are paid during the traditional home sale process. In a short sale, the bank generally pays these costs. One downside is that the lender will keep any equity in the home after the sale is complete. Buyers can benefit from a short sale because they may get a home for a lower price and have less competition for the property.
A short sale may be an ideal alternative to foreclosure for a homeowner. It could help to preserve a credit score as well as allow a person to get out from a mortgage in a timely fashion. Afterward, they might move to an apartment or another home that is more affordable. An attorney can help a property owner better understand their rights during the short sale process.