Short sales in Minnesota are becoming more and more common, especially with the number of potential foreclosed homes continues to rise. A short sale is an alternative to a house foreclosure on the real estate market that occurs when the lending company agrees to allow a house to sell on the market for less than what it owed on the mortgage. The difference is dropped and the original house owner (the short sale seller) is able to walk away without debt and without a ‘foreclosure’ mark on their credit report. However, when it comes to a short sale in MN, who is actually making the profit? We all know that someone must be benefiting from this transaction so where is the money going?
The Small Profiteers in a Short Sale in MN
The first person who is going to provide from a Minnesota short sale is the lending company. Although they may be taking a small hit by accepting the sale of a house for a smaller amount than what it owed on the house, they are still making back their investment money and thus benefiting. In most instances, the money they have made from the interest incurred on the mortgage loan will more than make up for the additional money that they may lose by allowing a short sale to go through. Furthermore, if the house is foreclosed, the lending company will have even more expenses on their hands and usually lose a large profit if the house does happen to sell again.
Another person who benefits from a short sale is the buyer in the short sale. Although they are paying for the house and inevitably going into debt and incurring a mortgage, many short sale buyers are using this home as investment property. In the end they are getting a great deal on a decent home and will be able to profit from it once the market picks up or once they determine what they want to do with the house.
Although the MN short sale seller will most likely not have to worry about additional taxes and fees for their house, the lending company or the new buyer will take on this responsibility. And thus, the Internal Revenue Service is still profiting from a short sale.
The Biggest Winner in Short Sale Transactions
However, perhaps the person who comes out on top is the original home owner. Although technically they are not pocketing any money, they are walking away from a very tough situation with hardly any damage done. Their credit report will not suffer as much as it would if they were go foreclose their home. Furthermore, they are not left with the emotional stress or shame that comes with a house foreclosure. And, finally, instead of worrying about what’s next, short sale sellers are able to walk away and start over. So, although there is no money involved in the transaction, the short sale seller will most certainly walk away with a bargain – their financial freedom.
