SHORT SALE. You thought it meant how long it took me to sell you house, right? Not so. It means a house is selling for an amount not sufficient to pay off the mortgage...therefore it is selling "short". Lenders are inundated with houses they have foreclosed or have taken a "deed in lieu" (of foreclosure). More about those in next week's tip. Lenders don't want to own any more houses. Most lenders would rather have the owner list the property for sale with a Realtor. When a buyer submits an offer the lender has to "approve" it before the owner can sign the offer. After all, they are also taking a loss. Lenders lose even more if they have to foreclose.
In selling short, normal fees are paid at closing and the lender "accepts" the balance and releases the lien (lenders generally want the Realtors to work for free but not many do). However, the lender doesn't always release the mortgagee (owner) from their note. If the owner has other assets, the lender can and will go after them. I have been pretty successful in getting lenders to totally release the owner from the deficiency when there are no other assets. In fact, I have been able to get my sellers who had to sell short, an average of $30,000 forgiven by the mortgage holder. One client of mine was released from an almost $75,000 deficiency. A short sale is not for everyone because it does ruin one's credit!
Buying a short sale may be a good way to get a good price on a home but it is a LONG, LONG and painful process. I've handled a lot of them in the last couple of years and let me share with you my experiences. Rarely is it an enjoyable experience for the buyer. It usually takes from two weeks to five months for the lender to respond to your offer. They don't say yes. They don't say no. They don't say anything. They don't respond until and unless they want to. It rarely takes less than 3 months and the last one I did was over 6 months to close. Want a good deal on a house? Feeling patient?
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