 A short sale is a lender-approved preforeclosure sale from the owner to a third party, for less than the amount owed the lender. Why would a lender voluntarily accept less than the amount owed rather than demand the full amount? The simple answer is that it would most likely cost the bank far less money to approve a short sale than it would to foreclose on the property.
However, banks are not in business to lose money, so while it sounds simple enough to get a short sale approved and completed, that couldn’t be further from the truth.
Short sales are a potential nightmare for the buyer and the seller. It is not uncommon for a short sale to take six months to complete. Very often negotiations go on for three or four months and then fall apart.
Any realtor can list a home as a short sale in the MLS at any price he or she chooses. (Not approved price). Right now, in my area, two thirds of all listings are short sales. Most of these listings are at prices and terms that will never be approved by the bank. Most listings have sellers that do not meet the criteria necessary for a potential short sale approval. Sellers assume the bank is going to forgive the shortfall, never assume. In almost every approved short sale I have seen recently the bank has asked for all or part of the short in the form of either cash at close, a promissory note or a combination of both. They may approve the short sale but not relieve the seller from the debt. Most agents and sellers have no clue as to what it takes to successfully complete a short sale. Attorneys that specialize in short sales have come into the picture and have helped close quite a few transactions. It is best to get them involved from the beginning and choose a realtor with knowledge and experience in short sales. Even with an experienced realtor, a top notch attorney and a seller that has a legitimate hardship, short sales are challenging to say the least. As a service to my clients with acceptable hardships I will be happy to accept short sale listings if I feel I can get you results. I always get the attorney involved early and establish contact with the bank. Success comes with experience. If you need to sell, call me for straight answers.
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