Please contact me with any additional questions you have.
Envoy Mortgage, Ltd.
NMLS# 947738 / AZ# 0921717
Many REALTORS don't like pursuing short sales because they usually take longer to close, require more work, and involve a third party (the bank) in the negotiation. However, depending on the area you are looking at, short sales may constitute anywhere from 30% to more than 50% of the properties available for sale. So if you exclude short sales you may be eliminating a big percentage of the market.
Having said that, short sales are not for everyone. They usually take longer to close - because the need to negotiate with the bank. So if the buyer is on a hurry, short sales may not be appropriate.
The best candidate for pursuing a short sale is a buyer that has some time to move and will not get frustrated with the wait and sometimes long negotiations.
I hope this helps.
Jose Dias, REALTOR
Realty One Scottsdale
Example: An owner bought a home a few years ago for $200,000 and got a $200,000 mortgage. Now the house is only worth $150,000. The mortgage has been paid down a tiny bit, but the owner still owes $195,000. Since the house is only worth $150,000, the owner will be unable to sell for what he owes on the house.
So the owner does a short sale. He sells it for what the house is currently worth: $150,000. It's called a "short sale" because the lender--the bank--will come up "short"--on the sale. The bank will lose $45,000. So after the buyer and seller agree to the price of $150,000, it goes to the lender which either approves or disapproves the sale for $150,000. If it approves the sale, then the buyer can buy it for $150,000. The bank loses $45,000, although it might try to collect some of that from the seller. The seller walks away with no money and ends up with damaged credit.
A lot of short sales are not approved by lenders. Those that are can take months and months to be approved.
That's a short sale.