How does a short sale work for the buyer?

Asked by Scott, San Anselmo, CA Wed Jun 2, 2010

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Richard Schu…, Agent, Los Angeles, CA
Thu Jul 29, 2010
My colleagues below have given some great answers. To put it as succinctly as possible: Time and Uncertainty are the two big differences. Time = you will have to wait (and wait...) for the bank to approve the short sale. Uncertainty = you are not guaranteed the bank will approve that price, or the property may go into foreclosure during the waiting process.

Good luck and feel free to contact me for any further clarification,

Richard Schulman
Keller Williams Realty
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Sylvia Barry,…, Agent, Marin, CA
Thu Jul 29, 2010
Hi Scott:

Short sale works just like the regular sale in the sense that a seller is involved and the seller will have to agree with the short sale purchase offer before the offer can be sent to the lenders to be approved. The sellers will also have to provide disclosures just as regular sales.

The differences can be obvious or implied - whether the offer will actually work because of lender approval or not, when an escrow account should be opened and when the deposits should be sent to escrow, whether the seller will pay for repairs or not (usually not), whether time can be extended or not, whether you can add / substitute another buyer or not, how a seller might respond to certain things might be differfent from regular sellers, ..etc...

Of course, one of the big items people talk about is the length of time it takes to get approval from the lender for the short sale; which, depends on how many liens there is on the property, how much deficit there is, who are the lenders and who are the investors behind those....

But other than that, it's the same. So... the trick is to find an experienced agent who knows how to advise you on a short sale as a buyer and sometimes, the agent even has to advise the listing agent if he/she is less experienced on how to handle short sale (what I had to do several times to push the purchase through).

Good luck!
Sylvia Barry
Frank Howard Allen Realtors
(415) 717-0293
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Tristan Cela…, , Marin County, CA
Fri Jul 9, 2010

Trailing is a primer on buying distressed properties, it answers your question and more.
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Anna M Brocco, Agent, Williston Park, NY
Wed Jun 2, 2010
A short sale is like any other transaction, but--Short sales are by no means fast sales, unless already pre-approved--the seller can accept whatever offer he/she wishes, but the lender decides to accept, reject or at times counter offer--the short sale process can be lenghty and generally properties are sold as is , therefore, don't bypass any traditional sales, as some may turn out to be much better bargains and less wait time to closing day.
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Joseph Domino, Agent, Scottsdale, AZ
Wed Jun 2, 2010
The biggest difference from a Buyers perspective is the uncertainty. With a traditional sale you will know in a short time (days) whether or not you have a contract. With a Short Sale you could wait months only to find that it is not approved and you have to start looking for a home again.
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Joseph Jones, , Albuquerque, NM
Wed Jun 2, 2010
Hello Scott,
A Short Sale from the buyer's perspective is very similar to any other type of transaction. You make an offer - the seller accepts, rejects or responds with a counter-offer. Once you have reached an agreement the offer is submitted to the bank for approval. This is the time consuming portion of a short sale transaction. It could literally take months for the bank to authorize the sale for the amount agreed upon between you and the seller. Patience is advised when dealing with short sales.
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