Short Sales are Not for Everyone

The current housing market nationwide has caused some distress. The number of foreclosures and short sales has increased, making an already strong buyers market look even better to investors and buyers.

While most understand foreclosures, the definition of short sale has caused some confusion. In a nutshell, the Bank or lender who owns the property has agreed to sell the property for less than currently owed, in order to recoup some of their money.

In other words, the owner of the property may have borrowed $200,000 from the bank, but the bank is agreeing to sell the property for $180,000 in order to protect most of their investment.

While deals are to be had in short sales, the mentality of negotiating with banks can be entirely different than what buyers are used to. The offer for a short sale has to go through bank red tape, often prolonging negotiations. The bank may require more information, fewer contingencies, and more patience. For instance, on a recent short sale offer, my Buyer didn't receive an answer for 6 weeks - and the "answer" was a request for further terms. If you are in a hurry to purchase or require an answer quickly so that you can move to the next offer, short sales may not be for you.

There are some questions to ask before entering into a short sale negotiation, and expectations to be managed. If you think these deals are worth fighting for, call a real estate agent and hang on for the ride. It is usually well worth the effort when you close on a property that you have instant equity in.


Regina Brassil, REALTOR, Exclusive Buyers Agent
Blog posts are the sole opinion of the author.