Nice post Kaushik, and a good link to the article. 

Short sale should be the absolute last choice. We as Realtors need to do everything we can to help our clients avoid this outcome.

Bill Roberts

Last choice is forclosure.

i think this quote is correct.

"Most lenders prefer short sales because foreclosures cost them time and anywhere from $30,000 to $50,000 per house in legal, appraisal, marketing and servings fees. A short sale gets a home off their books and typically costs a lender less than a foreclosure."

Nice article.

Thank you, Kaushik.  Very timely, and we have to approach it with dignity.  Great post!

While it's not an easy task and you really have to have good negotiating skills, be resilient and tenacious, it is the way to help those who are upside down and have to sell.  Don't forget the short-seller's tax consequences...

Good article.

Kathy Howe

Kaushik

The short sale has become all too common here is SW Florida.

I agree, in Florida the short sale has now become a way of life.

Kausik,

I'm coming across this more and more. Just the other day I heard about an investor who will be short selling on 4 of his units. FOUR. Wow. All with different lenders I would think. I can't imagine the same lender doing this.

Thanks,
Shailesh

Kaushik, we do have Short Sales going on here in Connecticut, but not any where the extent that it is happening in Florida.  Yes Short Sales are preferred to foreclosures, but they take forever and the banks are a pain to deal with.  The best thing is to stay out of either one, because neither one is a pleasant experience.

I talked to my lender friend about doing one for one of my sales.  She said that there still is a possibility of the lender trying to come back for the difference, much like a re-po car, and that it looks almost as bad as a foreclosure on their credit.   She too has seen them on the rise, and it is a slightly better option than foreclosure.

Lexa 

Rob is correct - a short sale is actually the 2nd to last choice.  The last choice is foreclosure.

Have you listed our helped purchase a short sale?  We've run into a number recently, but have found more dead ends than opportunities.  Do you have any insights?

Short sales are a different monster.  I see more and more agents take them, just for the listing.  You are no longer dealing with an individual, you are dealing with a bank, they have to approve the sale.  So the seller owes 250K on a house, the bank agrees to Shortsale for 190K, relieving your client of the forclosure proceeding?  The client does not just walk away.  They are still typically due the balance of the debt due.  They are also liable for taxes due on the profit the "incured" from the short sale. 

Shortsales are long processes and very complicated.  If you don't understand them, you do your client an injustise by handeling one.  It's best to refer it out to an agent that handles them. 

Couple thoughts- 

1.  The commission you expect is never what you agreed upon, rather you are the buyers agent, or the listing agent. 

2.  Should your buyer client want  a house up for Shortsale, make sure the Listing agent has authorization from the bank to actually have the house listed for short sale.  Once again, its a complicated process.  Should your seller suggest such a thing, make sure you talk to the bank and submit the paper work required for a shortsale. 

I've seen alot of time that agents will put in the MLS that its a shortsale and the bank has no idea.  Its actually pre-forclosure. 

Thank you for your insightful article ... as pointed out in several comments, these are complicated and if you represent the buyer, there's a chance, the bank may reject the offer ... if you represent the seller, make sure they understand there are drawbacks with short-sales.  The bank may allow the property to be sold for less than what's owed - but then there's the balance due - if forgiven by the bank - it's tax-able income - or the seller may still owe the balance and have to make arrangements with the bank to make payments on the difference.

I recently represented a seller who lost her job and was unable to keep up the mortgage payments.  We discussed a short-sale and she decided that foreclosure and subsequent bankruptcy was her best option.

Virginia's real estate market is slow and we're seeing short-sales everywhere!  My biggest complaint with the MLS and agents - some of them are not disclosing that the property is a short sale!! 

Good point Chad. We are seeing these errors in AZ re: preforeclosure versus a true short sale. If the Bank has not agreed, your buyer may see a rejection regardless of a full clean offer.