What is a Short Sale?
When the owner of a property owes more on the house than what it's worth and has a qualifiable hardship, A short sale is pursued by owner to possibly avoid foreclosure. While there is no guarantee that the short sale will happen (the bank may not approve, counter or foreclose), it's an alternative to hopefully avoid foreclosure that may have a far less impact on the homeowner in many cases.
Foreclosure can be devastating. It affects the sellers credit score, secret security clearance, potential employment, ability to rent, ability to finance, etc. Employers may even have the question "Have you even had a foreclosure?"
Who sells the Short Sale?
A seller raises their hand for help from a REALTOR (and Certified Distressed Property Expert) or a bank reaches out to the seller struggling with their mortgage). Banks will require that the property be listed by a REALTOR who understands the short sale process (preferably a Certified Distressed Property Expert) and market the property. Once a signed contract between buyer and seller is received, the bank will review for "third party approval". Third party approval is when the bank agrees to the contract made between the buyer(s) and seller(s). The bank can also counter or even reject the offer.
It is important that a buyer understand all the expenses associated with the short sale (such as closing costs) as there is NO guarantee the bank will contribute to any closing help. Typically a REALTOR can connect a buyer with a lender who can provide a preapproval and estimate of costs for the buyer.
It is also important to understand that the short sale is As-Is. Sellers can’t afford the repairs and the banks typically won't do them. In fact the contract is written as such when submitting an offer. Home inspections are for the buyer information only.
How long will it take?
Patience is important! Short sales can take 6 months or more. If you are in a lease and need to be out in a few months, unless you have alternate living and storage arrangements, A SHORT SALE IS NOT FOR YOU. Flexibility is a must and chances are an extension or 2 will be needed during the process. Banks don't respond to threats, so need to waste energy there. Patience always wins. Usually you are getting a good deal at a good price.