Pros and Cons of Short Sales In Salt Lake City, Utah

When a lender accepts an amount less than what is owed on a property, this is called a "short sale". Let's review why a Salt Lake short sale is a common option that is a WIN WIN WIN.

Lender - PROS: The lender gets out of a property sooner than later. There is a saying in the industry, "your first loss is your best loss". By accepting an amount less than is owed, the lender reduces the risk of not selling the property at auction or worse, not selling it for 6-8 months after the auction. If the market is declining, this could make it a much greater loss than had the lender accepted the short sale option.

Lender - CONS: On the flip side, the lender may be taking a loss greater than what they would have at auction or selling the property on their own after the auction. Some lenders prefer to roll the dice and sell the property at auction or on their own after the auction.

Buyer - PROS: Most of the time, a buyer of a short sale property is able to purchase a property that is 10%-30% below market value. The buyer moves in with instant eqiuty which acts as a buffer, even if the market were to decline over the following months.

Buyer - CONS: A Salt Lake short sale buyer often will have to be willing to wait to know if their offer has been accepted. The process can take from 4 week to 4 months. This can be a serious problem for some people, but those that can wait are usaully rewarded for their patience.

Seller - PROS: The seller can sometimes walk away with a little money in their pocket to get back on their feet and if they worked with the rigth Short Sale Agent, they will have avoided the serious 'foreclosure' or 'paid less than agrees' ding that can affect their credit for 7-10 years. Plus, an Expert Short Sale Agent will have assisted the client in avoiding a deficiency judgement on their credit for the amount of money that the bank lost from selling the home for less than was owed.

Most people who have had a foreclosure on their credit have a difficult time buying a home within the first 3-5 years, unless they have a very sizeable downpayment. Even then, their interest rate will be higher due to the fact that the new lender knows the person has lost a home to foreclosure in the past.

Seller - CONS: This is where we come to the biggest drawback for the seller. The seller will have to give up their home that they have worked so hard to buy and maintain. It can be a negative emotional experience. The seller should always remember, this is just a difficult time, but that things will get better very soon. It can be a very positive time and the seller reflects on the fresh start they are being given. The only negatives on the sellers credit score will be a few mortgage lates, which should not affect the seller after 12-24 months.

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