A short sale occurs when a piece of property in Illinois is sold for a lower price than the amount the owner currently owes on the mortgage. A lender may agree to a short sale when the owner does not have enough money to pay back the full loan amount and needs to move out of the property as soon as possible or if the borrower cannot continue to make the monthly mortgage payment. However, before the property can go up for sale, the lender must determine if putting the home on the market as a short sale is better than foreclosing on the property.
Who benefits from a short sale?
Several parties can benefit from the short sale process. These include the following:
- The seller of the home—when a seller’s home is put on the market as a short sale, he or she can avoid the headaches of foreclosure and easily transition into housing that is more affordable.
- The buyer—purchasing a short sale allows the buyer to avoid the risks of buying a property that has been foreclosed on.
- The mortgage lender—a short sale allows the mortgage lender to mitigate his or her losses on the loan by reselling the property and preventing the foreclosure process.
While those purchasing real estate may benefit from buying a short sale, this process is still associated with certain disadvantages. For instance, the buyer may have to purchase the home on an “as is” basis and the purchasing process may take longer than the standard buying process.
Mistakes to avoid during the purchasing process
To ensure that buying a short sale property is ultimately beneficial, property buyers should avoid making several mistakes during the purchasing process. First, those in the midst of the property buying process should avoid skipping the home inspection. Instead, buyers should make sure that they schedule an inspection, request repair estimates if any problems exist and ask plenty of questions.
Secondly, buyers should not assume that since they are buying a short sale, that they are getting a good deal on the property. To ensure they make a beneficial purchase, those buying real estate should consider the overall value of the home, the condition of the property, the asking price and the results of the home inspection before making a final decision.
Lastly, property buyers should read through contracts and other legal documents provided by the lender selling the property thoroughly. Those who are interested in purchasing a short sale property but are having difficulties understanding the terms of the sale contract may benefit from consulting with an attorney who can provide guidance and direction.