SHORT SALE CONFUSION IS ON GOING
We are being overwhelmed with the media talking about "short sales" and bank foreclosures and yet there is a big difference between the two transactions. People tend to think that you will get the "best deal" if you can buy one of these properties. "Short sale" properties are any thing but a short sale! You have to be very patient and understand that the listed price is not what the bank has agreed to accept for this property as there is a deficiency between the mortgage owed and the sales price. Thus creating the short sale----the sales price is not enough to pay off the mortgage and the bank is short on the payoff and has to decide on what they are willing to loose.
Traditionally, listing agents place these properties on the market at any price they decide on, usually less than the going price for the comparable property. Then a buyer comes along and decides to make a "low ball" offer. Then the buyer cannot understand why the bank counteroffers, many times six weeks or three months later with a higher price than the listed price. This is because the bank rarely gives a seller or Realtor a price on the property until there is an offer. Not a very intelligent path of pricing but yet the banks have chosen to do this.
We have a few situations where the banks are getting their acts together and are now having a current appraisal done to assist the Realtor with marketing this property at an acceptable price. This is now called the "preapproved by the bank short sale."
The main requirement for a bank to entertain a "short sale" is that the mortgagor must be suffering from some type of hardship such as loss of employment or extended illness.
The main difference between the "short sale" and a foreclosure or bank owned property is a "short sale" property is still owned by the seller. A foreclosed or bank owned property has completed through the legal process of foreclosure and is owned by the bank and the bank can make all the decisions regarding the sale of the property.
Most important, when purchasing a "short sale" or foreclosed property, insist on a title insurance policy from a reputable title insurance company. This guarantees that the title that you are receiving for this property is free and clear of prior liens including any tax liens on the property.
In conclusion, look for foreclosed properties in order to avoid any challenges. These are ready to be purchased. The "short sale" can tie you up and cost you more in the end.
Crystal McCall, Keller Williams Cornerstone Realty
Realtor, CRS, CRB, ABR, CIPS, e-Pro, Cyberstar