Short sales

[Derek Helm]

What are the pros and cons of a short sale? So many people seem very afraid of short sales, why is that?

[Antonio Lopez]

Pros of a short sale for distressed homeowner are (in FL):

- Avoid foreclosure

- It's a permanent solution

- Potential for HAFA relocation assistance versus getting kicked out by the bank

- Good negotiators get the bank to waive their right to a deficiency judgment

- Credit impact is low compared to foreclosure. What really kills them are all the missed payments up to the point of the short sale is successfully closed

- Credit reports show the mortgage as an account paid in full

- Can buy a new house within one day of a short sale

- Eligible for an FHA loan within 2 years versus 7 years with foreclosure

- Keep government security clearance

- Get your dream job because they're are no foreclosure on your credit history (yes, companies can check your credit history)

- Pay less on every loan you get for the rest of your life versus elevated interest rates with a foreclosure on your credit history

Pros for an investor buying short sales:

- Bank usually takes a discounted amount for a property

- Can control the offer amount and the way its negotiated

- Can control your deposit amount (no need for +10% down payment)

- Good negotiators can get you a good deal

- Can send in a contractors report for further discounts

- Plenty of people that need help = lots of potential deals to be made.

- Be a hero to a family that thought foreclosure was the only option out!

People seem afraid of short sales because there is a lot of uncertainty regarding what price the bank will ask for. The bank is associated with money and power and that might intimidate some folks. When you consider that negotiating with a bank is like dealing with someone that has (basically) unlimited money and resources, you can see why some people might just not want to deal with a bank at all.

Homeowners may be afraid of selling their house and have substantiated fears of where they will live next and how they will pay for the deposit, 1st and 2nd months rent.

Another reason may be that short sales generally take anywhere from 3 to 6 months and can possibly take longer leaving a potential buyer hanging for longer than expected (as an investor, this shouldn't matter as you should be filling up your pipeline with deals)

That's all I can think of for now. Check out my page AntlopMiami.com. I am the premiere short sale buyer and short sale specialist in Miami. 

Thank you for reading.