With the economic recession you have probably heard the term short sale tossed around a lot.
If you thought a short sale meant the process of selling your house was quick, think again.
In many cases a short sale is actually quite the opposite and more often than not the process can take many months.
In my recent home search, I actually did end up making offers on several short sales, but before I talk about the outcome I will explain what a short sale is.
When you purchase a home with a mortgage you make payments to the bank to eventually pay off the loan. A portion of homeowners, for whatever reason, are unable to make their payments. If you miss enough payments the home will eventually end up in foreclosure where the bank repossesses your house.
During the course of not being able to afford the house the bank may approve a short sale. A short sale allows the homeowner to work with a Real Estate agent to sell the house. When an offer comes in the seller must approve the offer but more importantly the bank(s) must also approve the offer. This back and forth process along with the potential for multiple banks involved can take a long time.
The reason the bank is involved is because in most cases, especially during the recession over the last few years, the amount owed to the bank will not be able to be paid in full from the sale as the mortgage balance that remains to be paid is less than the market value of the home (amount offered by potential home buyer).
Finally, each case in the short sale process is unique. I highly recommended that you use an agent who has short sale experience. In addition, a lawyer or cpa may be necessary for certain aspects of the sale.
Now back to my own experience, during our six month house looking adventure we had put in offers on two short sales. In both cases our two offers were in the process for 1.5 months on each property and never got accepted. Based on my experience I would say a short sale is anything but short and more like a long and drawn out process.
If you have the time and patience a short sale may work out for you. In the end, we ended up purchasing a foreclosure that took just a few days to get an accepted offer.