When a property is put up for real estate foreclosure, it is not only bad for the people who live there, but also for the organisation that gave the loan and put it as collateral on the property. Certainly, the homeowner has to go through a lot of shame and embarrassment when they lose their home. On top of that, they get a bad credit score and have trouble sleeping and worry about everything. But the homeowner isn't the only one who suffers from foreclosure. The lender has to go through a lot of trouble to get back what it lost.
Now, the lender has to go through the whole foreclosure process, pay all the costs of holding a successful auction, fixing up the property so it can be sold, finding the right buyers or investors, and, of course, making up for all the direct losses on the part of the creditor. And it happens often that the lender can't find a buyer at all, which means more loss. So, as a lender, what can you do to fix this? The answer is easy, but many people don't use it because they don't know about property short sale.
The term "short sale" refers to a situation in the real estate business where the lender agrees to sell a property for less than the loan balance, which is less than the normal market rate. This is done to make up for the money the lender lost because the borrower couldn't pay back their debts. With a successful short sale, the homeowner sells the home at a lower price before the actual property foreclosure and pays off the debt to the lender entity, avoiding the foreclosure auction. When a homeowner does a short sale, not only does the homeowner save a lot of money, but so does the lender.
The debt is directly paid back to the lender, and the small losses caused by the late payment can be easily made up for. The losses caused by this are nothing compared to how much it would have cost the bank to go through the foreclosure process. Lenders are starting to see short sale as a good alternative to foreclosure because it has its own benefits that go further than a real auction. The most obvious benefit of a short sale over a foreclosure is getting back money that was lost. A short sale is usually handled by professionals, so the lender doesn't have to get involved. This saves the lender time and money.
In contrast to the foreclosure process, there are no extra fees for closing a successful short sale. As a lender and eventual owner of the property in question, you won't have to go through the trouble of fixing up or fixing up the property before the auction. There's no need to market or sell the property. If you, as a lender, agree to the short sale of the property in question, you can expect to get a price for the property that is closer to industry standards. When a property goes to auction, the price is often very low compared to industry standards.
