Hi Gnparvate,

Everyone gave great sound definitions. However, always remember when buying short sales that their may be very good deals to be had that it takes a long time. Also, remember to use a good agent who knows how to properly setup the contract and communicate well with the listing agent - this will save you tons of time and money!

Brendan Aiello
Cashin Company Realtors
AielloB@gmail.com
(650) 759-2067
(650) 403-6262
http://BrendanAiello.com

Hi Gnparvate,

There are a nunber of good explainations below. Working with short sales can be very stressful and there is no guarantee that you will be able to buy it. But if you can wait, the banks are not taking as long to respond and it could be a great buy.

You have received several accurate answers to your question......a buyer has to be very patient....for lender
approval can take months. Donna Black

Hi there,

Andre has given a pretty concise definition to what “short sale” means and why short sales are "subject to lender's permission/approval". In the real estate market today, you'll most likely to see the following types of sale on MLS descriptions:

1. Regular Sale - this is the most traditional form of sale in which the owner, who has built equity over time and through appreciation, decides to put the house on the market. He/she will keep the sale proceeds from the sale after all the loans and transaction fees are paid off. The owner is usually the sole decision maker on the sale about how much and what terms to accept on the offers.

2. REO or Bank-owned Property Sale - As the name stated, the bank owns the title of the property (due to foreclosure). From a buyer's perspective, this type of sale is very much like a regular sale in terms of the process, meaning you're dealing with the owner (the bank, in this case) directly and the owner is the sole decision maker on the sale. There are differences in terms of disclosure requirements, but that's a whole different topic of discussion.

3. Short Sale - A short sale occurs when a homeowner sells their home for a price that is less than what they owe to the bank. This type of sale has gained prominence a few years ago as house values started to slide and some people MUST sell their home due to job loss and/or other financial hardships. As you can see, the process for a short-sale is very different from the two mentioned above because the decision making power does not reside with the owner -- in some cases, there are multiple banks involved if the house has more than one loan on it.

If you are shopping for homes now, it's very imperative that you understand the intricacy and the process with the different types of sale. It is to your advantage to strategize your offer based on important information (often not listed on MLS descriptions) that is pertinent to the property of your interest. Working with an experienced Realtor will definitely give you that competitive advantage. Good luck with your home search! I do work locally in the Bay Area, so don't hesitate to contact me if you have any further questions or would like learn more about the home-buying process. :)

the site below has a lot of great ansners to short sale questions

"Subject to lender's approval" means that the Seller can't make the final decision. At the current price, the Seller may not net enough money to pay-off the mortgage. So, any offer will be "Subject to lender's approval". Basically, the Seller is going to ask the lender's permission to take less than they are owed on the mortgage.

A short sale is usually better than a foreclosure on your credit, (although not much better) and most short sales are headed towards foreclosure. That's one of the reasons it takes so long to get an approval on these... the banks don't want to lose money and often don't move very to quickly to approve them. However, if they see that foreclosure is the only other option, they may (eventually) approve the short sale. "Normal" approval time to get a bank's blessing is 30-90 days (though it can take longer) before you can start the 30-40 day closing process. I have seen shortsales take up to 9 months. Hope that helps