July 6, 2010 in Blog by admin

What the Heck is a Short Sale???

Every business has its own special language – when I worked for an airline related company I had to memorize all the 3 letter codes used by the airlines for the various airpors – so O’Hare became ORD, Midway MDW and my favorite city – San Juan became SJU.

Real estate has its own unique verbiage and “short sales” are something that we seemed to be constantly talking about and assuming that the general public should know about.

The term “short sale” refers to a sale where the lender will be accepting less than what is currently owed on the mortgage that the seller has on the home.  The home will be “short” the total payoff amount.  Usually the seller has some sort of “hardship” but at times the bank will accept a short sale if the home seller is moving out of the area due to job relocation or if they are an investor.  Until you ask the bank you don’t really know if you qualify for the bank’s short sale program.

Currently the government has a couple of shor sale programs and you will see and hear that a particular transaction involves a HAFA short sale – officially the Home Affordable Foreclosure Alternative. Fannie Mae and Freddie are currently rolling out their own version of this program.

The only difference between a “regular” market listing and a short sale is paperwork and time.  The seller has to submit a lot of paperwork and sometimes the buyer will have to provide additional information to the bank especially for Bank of America’s new platform Equator. 

If you are involved in a HAFA short sale your timeline will be more condensed then other short sale transactions.  You should be able to complete the transaction in 60 days or less.  But unfortunately, despite its moniker – short sales can be anything but short timewise.  Some have been known to go past the 1 year mark before they are completed.

Patience is the name of the game when you become involved in this type of transaction but the payoff can be major since you will get a home in much better condition than a foreclosure on average, since the seller’s are voluntarily leaving and the price will be much lower than any similar market listing.

Just be prepared for the delays and sometimes lack of updates if you are on the buyer’s side.  Depending on who is handling the actual short sale negotiation, (3rd party negotiator, lawyer)  the listing agent may not be able to provide timely updates.  Make sure your agent if you are the buyer tells the listing agent how often you want the updates even if the update is “nothing to report”.

Short sales are for motivated buyers that understand that the wait will be worth their time. They are going to be with us for quite a while so whether you are a buyer or thinking of selling your home “short” give me a call and I will be happy to go over your options.

I have a special place in my heart for anything that is “short” since I have been “short” in stature and  sometimes “short tempered” but mostly “short” sighted in assuming that everyone knows what a “short sale” is.