Duke and I (and others?) have made reverence to the Distressed Property Law (DPL). For buyers the main (only?) concern is buying within 20 days of a foreclosure date, (possibly even continued sale dates no longer in effect). And arguably that's 20 days before or after such a date, which makes no sense, but not making sense is common with the DPL.

If a buyer buys within 20 days of a foreclosure sale then that buyer can become a "Distressed Home Consultant" and be deemed to be a fiduciary of the seller and have to put the seller's interests ahead of their own. No one really knows what that means. The buyer need not even know the house is in foreclosure for this to come to be. Penalties for violating the DPL can include treble damages up to $100,000 and attorney fees.

Given the time short sales take to close, the fact that the right hand at the bank probably doesn't know what the left hand is doing, and the fact that the first foreclosure date often gets continued in 30 day chunks, the chance of a closing falling within 20 days of a foreclosure sale is rather high with short sales.

Hi Jannelle,

A lot of great answers here. Suffice it to say that can be a lengthy process involving the seller and their lender or lenders. The price is negotiable but a deal is always in question... It definately is not for the faint of heart. WA state as also added it's $.02 in as well this year...

Duke

A short sale is when you need the owner and some bureaucrat at the bank to both approve your purchase. For some reason people seem to think they're good buys. I've always questioned that, but I'd really question that in a falling market. There are better buys out there now, and you don't have the risk of running afoul of the distressed property law with those other buys.

Hi!

The site below has a lot og great information!

A Short Sale is the term used when a lender agrees to sell a property for less money than the loan amount. The property is accessed and priced at market value and not what is owed to the lender. The property owner will not receive any proceeds from the sale of the home and will avoid foreclosure.

A short sale gives homeowners that are facing serious financial strain relieve from what can be a very difficult and stressful experience.

For more detailed information, please feel free to give me a call.

Anthony Acosta, Jr.
866-515-1966 Toll Free Cell
Atlanta, Georgia

Cheryl, That is the best answer I have seen.

A short sale is when a seller owes more on the property than it is worth and is seeking approval from the lending agency to sell the home for less than the amount that is owed to the lender.

Hi,
A short sale is when an owner owes more than the property is worth and is willing
to accept less than what is owed. The bank or note holder has to agree. It can be
a very long process and is not for the faint of heart. The list price is not the actual
sales price..... anything can be offered and the price could come down more.

If you are in the market to buy or invest now is a very very good time. Please call
or email with any other questions or go to http://www.frazierrealestateteam.com
Thank you,
Jim and Caryl Frazier
"At your Service"
360-921-8064

See: http://therealestatewhisperer.blogspot.com/2008/12/types-of-…

A short sale occurs when the proceeds of a real estate sale fall short of the balance owed on the property.[1] In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's Loss mitigation department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, sometimes (but not always) in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Most Short Sales leave a deficiency balance for which the Mortgagor / Borrower is still liable. In 99% of all cases it is not a settlement-in-full. A deficiency balance will remain while the mortgage broker, real estate agent / broker, loan officers, title and closing agents retain their profit. No regulatory agency governs this hybrid transaction.

Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower's financial situation.

A short sale typically is executed to prevent a home foreclosure. Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. For the home owner, advantages include avoidance of a foreclosure on their credit history and partial control of the monetary deficiency. A short sale is typically faster and less expensive than a foreclosure. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.

A short sale can be a lengthy process. It is not uncommon for a lender to take 8 weeks to counter your offer. What is a short sale? It is when a seller is behind in payments and the lender is asked to take less than the monies owed. There are many scenarios in short sales. If you need a home NOW, you might want to look at bankowned homes.