Pros and Cons of a Short Sale

There are many pros and cons to a short sale that many buyers and sellers need to understand properly the time line in itself.

The Pros:

  • The Seller and Lender can avoid foreclosure on the property
  • The Buyer can possibly buy the property below market value and have a chance at getting a good deal.
  • The condition of the home is better than a foreclosure/bank owned property
  • Property hasn’t suffered vandalism due to the homeowner still occupying the property

    • The Cons:

  • The bank may not approve the short sale while taking their time to turn down the offer. It may be over a month when a response is heard and it’s not good.
  • A bank can usually take 1-2 months to answer the buyer’s offer.
  • A bank may bump one buyer out for a better offer
  • The property is sold “as-is” with no repairs included.
  • The Seller may end up owing federal income taxes on the short sale due to the amount forgiven by the lender
  • Make sure the seller has experience with short sales. The complexities of this type of real estate transaction can screw things up for the seller.
  • Buyers should keep looking at properties since they don’t know if the one they made an offer on, will be approved by the bank.
  • The property must be in actual default for the lender to approve a short sale. Make sure the seller has gone into default.

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