I get asked this question so often. So I thought I would give a little insight on the term "Short Sale".
A "Short Sale" is when a homeowner puts their home on the market at today's value, and that value is less than what they owe on their loan. They are asking their lender to forgive the difference of what they sell the home for verses what they owe.
A "Short Sale" is also known as a "Pre-Foreclosure" (a more professional term)
The process can be very long and tiring to a buyer who is ancious to get into their new home. But with lots of patience, a short sale can turn out to be a great bargain.
I am not a big fan of "Short Sales", only because I have seen many fall apart for various reasons. For example; I had a listed "Short Sale" with a pending contract and two months into the deal, the owner says they have filed bankrupt and are including the home. What that meant is that our pending contract was now null and void. I had another customer whom I represented as a buyer's agent, and we presented a full price offer(according to the mls terms) and the very next day the Listing Agent tells us that the owner has decided to do a "Deed in Lieu of Foreclosure". This means the owners lender has decided to let the owner sign over the deed instead of the foreclosure process. This can save a lender $50,000. plus in foreclosure expenses. I had another incident where I again was the buyer's agent and we presented an offer on a home less than the listed price. After 60 days of waiting for the banks response, they came back and said the home appraised for $15k more than our contract price and wanted the appraised price. We thought we made a fair offer based on recent sales. Fortunately for my customer the exact same plan came on the market as a bank owned, and we purchased that home for $15k less than the offer we made on the "Short Sale" home.
On the other hand, I have heard that there are successful "Short Sale" closings. You should know that they do take time (approximately 60-120 days+) to close these types of transactions.
Hopefully this gives some insight to the meaning of a "Short Sale", the time frame of a "Short Sale" aka "Pre-Foreclosure", and the risk involved with a short sale. But lets not forget, there are happy customers out there who have had successful "Short Sale" closings. With a lot of patience and time you too could be one of those.
Hope this helps
