Are there any benefits for a home short sale?
It depends how you look at it. One way is that all the parties involved in the transaction benefit something. The seller is relieved of the home they cannot afford. The lender avoids costly foreclosure proceeding. The buyer purchases the home at an attractive price.
A short sale is usually more acceptable for a homeowner than losing a home through foreclosure. Short sales and deeds in lieu of foreclosure are also being pushed by certain mortgage-related government-sponsored entities such as Fannie Mae.
Another benefit for the seller is what happens to their credit. While it is up to the individual lender to decide what to report, what often happens is the loan will report as "paid" on their credit report. This can be either good news or bad news. The credit report will likely be a reference that says "settled for less than originally owed" or something similar. It is certainly more advantageous to have the short sale referenced than to have a foreclosure on their credit report. The sellers in a short sale may be able to qualify for new loans in as little as two years.
A short sale typically is executed to prevent a home foreclosure. Often a bank will choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. Lenders have a department typically called a loss mitigation department which processes potential short sale transactions. Lenders have a varying tolerance for short sales and mitigated losses. The lender will proceed with a short sale only if they feel like it is the best option for them. Therefore the real estate short sale benefits the lender because it is the best option for the situation.
Buyers typically benefit from a short sale for two reasons. First is likelihood to get a better price on a short sale property. The lower price comes with a hidden cost of time and other issues that could add to the final real price. One issue buyers of short sale properties should note is the condition of the house. The buyer should understand what they are getting for the price. The second main reason is this may be the only way to get the house they want. There may be no other way to get the house you want in an area and price range then a short sale.