People in Massachusetts looking to buy a home have many options available. A short sale is an option that offers you potential benefits but could also involve some common pitfalls.
According to government mortgage guarantor Freddie Mac, a short sale occurs when an owner must dispose of the property, but its value is less than what the owner still owes on the mortgage due to depreciation. The lender often takes a loss on the amount still owed; therefore, it is the lender, not the owner of the property, who chooses which buyer’s offer to accept.
Short sales offer potential benefits to everyone involved in the transaction. As a buyer, you do not have to deal with the risks involved in buying a foreclosed property. Additionally, the lender recoups some of its loss and the owner avoids the consequences of foreclosure.
However, there are also downsides to purchasing a short sale. The sellers typically offer the property as is, meaning that you are not able to request any changes or repairs. In an ordinary home transaction, the seller sometimes contributes to the buyer’s closing costs. However, the seller’s mortgage lender is unlikely to agree to this in a short sale because it is already taking a loss on the property. A short sale is not a good option for you if you have a certain timetable by which you need to be in a new home because it often takes more time to complete.
The information in this article is not intended as legal advice but provided for educational purposes only.