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What are some benefits and downsides to short sales?

Buying a short sale property in South Carolina can be a great opportunity for those who want to get onto the property ladder, and even selling a home through a short sale can be beneficial for sellers. There are various benefits to a short sale for everyone involved, which is why it can be a great process to work through. There are downsides, too, though, that need to be considered.

First of all, as a homeowner, you can avoid going through foreclosure if you choose to pursue a short sale. You may have to make up the difference in the pricing of your home versus the sale price, but it does allow you to get out of the majority of your mortgage and to move into more affordable housing quickly. This can also keep you out of bankruptcy, especially if your mortgage is the main bill putting pressure on your finances.

A buyer benefits by being able to buy the home at a fair price. The property isn't a foreclosure, so the buyer can avoid the hassle of buying a foreclosed property, which could have damage from sitting empty for so long. Other people, such as the mortgage lender, insurance providers and others also benefit from the sale.

There are some downsides to short sales. They can take a while to process, since the short sale needs to be approved by the seller's mortgage lender. Negotiations may need to take place, and any lienholders could slow down the process. As a homeowner, if you've entered into bankruptcy, a short sale may not be an option, either. A short sale's negotiation is considered to be collection activity, which is not allowed during a bankruptcy.

Source: Freddie Mac, "Buying a Short Sale Property" accessed Feb. 24, 2015

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