What is a short sale?

Asked by Dan, Hickory, NC Thu Dec 13, 2012

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Anna M Brocco, Agent, Williston Park, NY
Fri Dec 14, 2012
A short sale occurs when an owner has proven hardship to the lender and can sell for less than owed on his/her mortgage; the owner can accept whatever offer he/she wishes, but the lender decides to accept, reject or counter offer; short sales are by no means fast sales, much will depend on the number of liens involved, who is negotiating the sale for the owner, etc., therefore much patience is oftentimes necessary...
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My NC Homes…, Agent, Chapel Hill, NC
Fri Dec 14, 2012
A short sale is when a seller is attempting to sell their home for less than they owe the mortgage holder. Here in North Carolina which seems to prefer their banks over their citizens, a Seller is truly shooting themselves in the foot should they attempt a short sale without an attorney for a number of reason. The idea that the Seller is really being allowed to walk away from their debt it debatable.

As you've indicated you're a buyer here's what you need to know. The asking price is a made up number that the Seller is hoping for, unless the property has been clearly pre-approved for a short sale by the Sellers lender. (The vast majority are not) If the short sale is pre-approved then the asking price probably is what the bank will accept.

Assuming the short sale isn't pre-approved the seller may sign the offer but until it's approved by the lender it's more or less a worthless piece of paper. Buyers need to know that from the time the Seller signs until the bank reviews and responds that 3-4 months will go by. Buyers should also understand that 50% or more of the time the offer will be rejected as the Seller doesn't qualify (This is why I personally will not waste my time on short -sales unless they have been pre-approved by the lender. If the bank approves the seller for a short sale, they may or may not accept your offer, they may counter with a different number. The buyer may terminate their offer anytime up until it's been signed by the bank.

If you are a first time buyer and/or have a defined time schedule to buy a home, I would advise you against looking at short sales that have not been pre-approved. I would also advise you to find a buyer broker who is experienced in them and please don't use the listing agent.

Good Luck.
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Teresa Bowman, Agent, Hickory, NC
Thu Dec 13, 2012
A short sale is when the proceeds of the selling of the property aren't sufficient to fully pay the outstanding balance off. Unless the holder of the mortgage agrees to accept a lesser amount to settle in full, then the seller is still obligated to pay off the remaining balance and the seller can't convey marketable title to the buyer.
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Debra (Debbi…, Agent, Livingston, NJ
Thu Dec 13, 2012
Simply put - it's anything but short!!

A short sale occurs when a seller owes more (to the bank) for his house than it is worth (more than the potential sale price)
.
The seller asks the bank to forgive him the difference between what is owed and what it may sell for, and allow him to sell the house for that lower amount, even though he or she won't be able to pay off the mortgage in full.

Not everyone can just do a short sale.
In order to qualify for a short sale you'd need to show some sort of hardship - financial due to job loss, medical issues, divorce, etc. There is a packge (lots of paperwork) that will be filled out and presented to the bank for their approval.

You may attempt to sell your home, and accept an offer. That offer is then sent to the bank and subject to the bank's final acceptance.
This entire process can take many months, and there is always the possibility it will never close.

Hope this helps............
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