What Are Short Sales?
Short Sales are properties that require a third party approval, usually a bank, in order to sell. With Short sales the home owner owes more than the home is actually worth, or at least less than what the net sales price will actually be.
Properties listed as short sales are usually distressed, meaning that the borrower is behind on payments. Homes listed as short sales are usually pre-foreclosures, in that if the bank doesn’t work something out, the property will eventually end up at a foreclosure auction.
The term “short” in short sales has nothing to do with the amount of time it will take for the real estate transaction to close. In fact, short sale real estate transactions are usually some of the most time consuming real estate purchases. The “short” refers to the fact that banks will have to accept “short” of the actual payoff amount.
Short sales are especially complicated in instances where the borrower has more than one loan. In these instances, the first or primary loan will usually not negotiate a short sale until the secondary loans have agreed to accept only a fraction of what their due amounts are. Some short sale transactions have multiple bank negotiations and multiple accounts that need to be shorted.