Why the H*** Do They Call it a Short Sale???

Oh,the confusion that those two words have caused.
I have had so many people interested at looking at
Short Sales because they think it is a fast way to
a house (and a bargain). Nothing could be further
from the truth.

First of all, Short Sale properties are priced at
market value. The price reflects the condition
and location of the property. That is no different
than any other house for sale. So, Short Sale does
not necessarily mean you are getting a great deal.

Second, the reason it is called a Short Sale has nothing
to do with how long the process will take. It is so named
because the homeowner is going to be short of the amount
needed to pay off the mortgage. This complicates the
process and turns what is normally a 30-60 day process into
one that can take months.

Because the homeowner is going to be short, the bank
must agree to the sale at the offered price. You will often see
the phrase, "3rd party approval required". The bank is the 3rd party.
They must agree to the sale without going after the homeowner for
additional cash to make up the difficiency. Banks have been known
to sit on offers for over 6 months without giving the buyers any
indication of whether or not they are going to accept or reject
the offer.

Now, new laws went into effect a few weeks ago that are supposed
to streamline the process. It is a bit to early to tell if these
regulations are having any effect. In the meantime, more and
more homeowners are finding themselves owning a home that they
owe more on then they can sell for. Short Sales continue to be
a log jam in the system. And no recovery of the housing market
is going to be possible until that log jam is cleared.

So, think long and hard before you make an offer on a Short Sale.
Make sure your Agent has sucessfully negotiated Short Sales in the
past, or that she/he has a good Short Sale negotiator they use.
Be patient, and good luck!