Money may be tight as you seek to buy a New Jersey home, so you cannot afford as big a house as you like. People on the lookout for deals may find a home offered for sale through a short sale. While a short sale may help you get a home for a cheaper price, there are some important details to know going forward.
According to Bankrate, a short sale happens when the current owner cannot continue to pay off the mortgage and wants to avoid foreclosure. The lender recognizes it is unlikely to recoup the outstanding mortgage and agree to a sale for a reduced price.
Buying a cheaper home
The major benefit of a short sale is that you are buying a home for less money than you would have to pay in a normal real estate purchase. Given that the current homeowner and the mortgage lender are probably eager to divest themselves of the property, you may even stand a good chance of securing the home with a low bid.
In addition, there may be less competition for the home. Not all home buyers want a property sold through a short sale. This might give the seller added incentive to take your offer.
The possible drawbacks of a short sale
Buying a home for a lower price does not mean the home is in pristine condition. If the owner could no longer afford to pay off the mortgage, the owner probably was not able to invest in home repairs or improvements. Chances are that a home you buy in a short sale will have defects you will have to fix, and those defects could be expensive.
Additionally, short sales can become complicated and may take longer to complete. This is why many short sales involve real estate agents and legal professionals who specifically understand how short sales work. If you have the time to spend, you may decide taking more time and effort for a less expensive real estate purchase is the right choice for you.