What is a "short sale"?

[CiaoBella]

Please explain to me (someone who has no knowledge of real estate terminology) what a short sale is and exactly what it means if I am a homeowner offering my home for a short sale. Thanks in advance for your responses!

 

[Mermaid]

This is pretty straight forward language: http://en.wikipedia.org/wiki/Short_sale_(real_estate)

I had to look it up when I was (idly) searching the MLS last week. There's a condo for sale at Rollin Tide that's a short sale.

 

[CiaoBella]

Thanks Mermaid, very helpful! Is it correct to think that any seller doing a short sale is really hurting for money? The link stated this sale is often last step before foreclosure, how long do banks normally allow someone to live in a home they are not, or only partially paying for?

 

[MaxxandMe]

It doesn't necessarily mean that the seller is hurting. A lot of sellers want to stop paying on a piece of property that is worth a lot less than what they owe. Therefore, they stop paying, put it on the market, hope for an offer,and hope the bank will allow them to sell for less than they owe. Sometimes, the bank will allow the seller to sell for less, however, they then make arrangements with the bank to pay off the balance. Every Bank handles it differently. I have heard that the banks won't even consider a short sale, in other words wont discuss an offer, unless seller is delinquent in payments. It seems we learn something new about short sales on a daily basis. It is a crazy market not just here, but across America.

 

[CiaoBella]

Thanks so much! I am definitely learning alot!

 

[MaxxandMe]

We all are.

 

[spinDrAtl]

As was said, all banks are different but I have heard that most will not even consider a short sale unless the buyer can prove they are unable to pay, not that they just don't want to.

 

[Joe Mammy]

I wrote a "market pulse" last month about short sales and put links to active short sale listings:

http://thewiredagent.com/pulse_20.html

 

[CiaoBella]

Thanks, I enjoyed your article. What about the Freeport area? I have seen one listing for a home in Hammock Bay as a short sale.

 

[NewUrbanGirl]

If one does intend to try a short sale, make sure to specify "without recourse" for the bank, otherwise they will come after one for the difference in selling price and amount owed.