The TRUTH on Short Sales!
When looking for your new home in the Phoenix Metro area, chances are 40% of the homes you may want to look at are vacant. Likewise, 30% or more of those are going to be short-sales, or what I have heard lately...long sales.
First of all, what is a short-sale. A short-sale is when a seller is selling his/her home for less than what the seller owes on the mortgages/notes for that specific home. So, the note is being sold short. Whether or not a seller can sell their home short is not at their dicretion. Whomever holds the loan/note will decide on whether or not the seller can sell their home short. This is where it now can become a 'long sale'. Likewise, MOST of the short-sales on the market are listed for a much lower amount than what the bank or banks are willing to accept. Listing agents do this to attract as many buyers to the property in hopes to bid up the sales price or to get a contract submitted to the bank to get the 'short sale' into the negotiations process. The seller may have 1 or even 3 mortgages on the property. That means 1 to 3 banks have to agree to the terms and conditions of the sale. Mainly, 'how much will bank 1 get, and bank 2 and bank 3' if there are 3. This process could take 1 month or 3 months or could fail completely..
With all of that said, I highly recommend to a majority of buyers that need to find a home live in within 3 months to stay away from short-sales. I have had well over 90% of my short-sale transactions NOT GET APPROVED. Why? Ask the bank.
So, I hope this helps in your understanding of a short-sale and will help you determine if you would like to proceed in putting an offer in on a short-sale.