IMG_0958First of all, a Short Sale is anything but short, fast, or quick, despite the name. A Short Sale by definition is where the seller is selling the home, and is "short" on the money needed to pay off the mortgage in full, hence the name "short" sale. Well, that's all find and dandy, but what does that mean to me as a buyer?

Short sale homes can have showings like any other property on the MLS. The main difference is in the process it takes to get an approval from the seller's mortgage company. Let's take this example:

Seller purchased the home 4 years ago at the top of the market at $250,000. They need to sell now due to a relocation, but the house is now only worth $170,000 and there is no way they can write a check for $80,000+ to sell the home. What are they to do? Their options are: foreclosure, short sale, or keep the house (and perhaps rent it out).

So you submit an offer at $170,000 and the seller says ok, we'll submit the offer along with our hardship package to the bank. The bank can take anywhere from about 8 weeks to about 16 weeks (and in some cases much more) to figure out what they want to do with the offer. During that time, they will: 1. let it sit on someones desk for a couple of weeks. Then 2. Look at ordering a BPO and an appraisal. 3. Let it sit a few weeks more. 4. Look at the BPO and appraised value and run some numbers. Then 5. Let it sit some more on someone else's desk. Then finally 6. Accept / reject / counter the offer.

If the offer is accepted or countered and you reach an agreement, then and only then, can you move towards a closing. Meanwhile during the entire 8-16 weeks, you're just in a negotiation period.

What about the hardship package, what's that? The seller will have to document their hardship, whether a company is forcing them to relocate, or if it is a divorce situation, or medical situation, or whatever the hardship is. Included in this package is full documentation of their assets to show the bank that they cannot come up with the difference to pay off the mortgage in full. These packages often run 30-50 pages due to the various forms and statements needed.

With all that trouble, should I even be looking at short sale homes? That's for you to decide. Currently, due to the length of time it takes, short sale homes are usually selling at a discount, and are usually in better condition than foreclosures. But that's because of the time you'll have to wait to close on a short sale home.

Any questions? Please feel free to contact me.

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