The process of buying in a short sale, either in the real estate or fiscal arena, involves capitalizing on the sale of securities that are likely to fluctuate in price in the near future. The investor in such a sale also buys with the understanding that the seller is a potent future investor in the same instrument or property. The sales are transacted only to take care of sudden financial crisis and to prevent a foreclosure in the case of real estate.
The purchaser within a short sale benefits from a further drop in security price. This helps the buyer to retain the property for a short period of time and resell when security prices rise. A short sale investment profits from market fluctuations. While the seller loses due to the less-than-market-price, the investor benefits by having to hold on to the property or security for a short while only. When and as the repurchase of the instrument or property takes place, the 'closing' position is secured. Buyers invest in a short sale only for profit out of a good deal. It is but natural to jump at an offer that is lower than the asking rate in the market. Even though the profit may not be a huge one, the difference makes the short term investment worthwhile.
Buying a short sale offers the purchaser the following advantages:
• Deletion of negative impact of a foreclosure on credit history.
• Control over the instrument/property deal on account of the seller's urgency.
• Faster and less expensive transaction formalities.
• Discounted payoff that earns revenue as it lies dormant amidst market fluctuation.
• Protected economic recession proof expedition of the short sale transaction.
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