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When you are in the market to buy a home, finding the right home in your price range can be challenging. The goal is usually to find a balance between the things you want in a home and affordable monthly payments. This usually leads to some compromises and it’s not always easy when you’re making a very large purchase (for most, the largest purchase of our lives) and you plan to live with it (or in it) for a long time.

Before you even start shopping for a home, you should figure out how much house you can afford (here’s a cool calculator). A large part of determining your price range has to do with your credit. A good credit score can help you get a lower interest rate, which in turn means a lower monthly payment, which can increase the amount of money a lender will approve you for. You can get two of your credit scores for free every month on Credit.com.

If you’ve optimized your credit and saved a lot for a down payment and still can’t seem to find a house in your price range, there is an option that may be able to help you get more for your money. It’s called a short sale.

What Is a Short Sale?

A short sale, or pre-foreclosure, is known as a distressed property. These homes are available because the seller can no longer afford the mortgage and is attempting to negotiate a deal with the lender to avoid a foreclosure. With this sale, the lender agrees to accept less than the amount owed on the mortgage. If you have found a property that you want to buy listed as a short sale, it’s a good idea to educate yourself on the pros and cons of such a transaction.

The Cons

The most difficult challenge (and most ironic) of a short sale is how long it takes to complete. Because the bank has to approve the offer and not just the seller, as in traditional home sales, agreeing upon a price and settling on a buyer is often more complex and time consuming. If you have a specific date you need to be in the home, this may not be the best route, as it can be hard to nail down a closing date with a short sale.

Another aspect of short sales to consider is that you are buying the property “as is,” meaning you inherit any needed repairs or problems it may have. Since the seller is having financial troubles it can be hard to get any “extras” covered in the closing. Therefore, sometimes buyers have to be ready for higher closing costs.

It’s also a good idea to work with a real estate agent who is familiar with the complications of a short sale and is willing to take a cut in commission if those are the lender’s terms. But it can sometimes be tough to find an agent who is willing to work on a short sale, and even more difficult to find one with extensive experience in this type of sale.

The Pros

Most obviously, a short sale home is likely to be offered at a bargain price. This of course depends on the local market, but a pre-foreclosure property is almost always cheaper than one sold through traditional means. Getting a decent home at a low price may be enough of a motivator to help you get over the list of cons.

Plus, in comparison to foreclosed properties (the other distressed option for cheap homes), the short sale home has many advantages. It is likely in better condition and move-in ready, which requires less startup costs from the buyer. You will also receive disclosure information from the bank, which can help you make your decision more wisely.

It’s important to be patient and flexible to survive the short sale process. If you really like a home and are willing to go through the short sale loops, you could score a great property at a great price.

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