Beware The “Short Sale”

If you have been looking at the real estate market lately then you have seen the term "short sale." A short sale happens when an owner can no longer make their payments on a home and the sales price of the home is not sufficient to cover the costs of fully paying off all the liens on the home.

In certain circumstances the lender will agree to accept a payoff for less than what is owed and forgive the rest of what is owed on the mortgage. The key words here are "certain circumstances". The seller must be in default and the seller must meet rigid financial guidelines. If the seller is not in true financial distress and is just simply not making payments then odds are they will not be approved for s short sale. In fact less than 20% or so of short sale applicants do get approved and the process can take weeks if not months to negotiate.

While many homes are advertised as short sales and look very attractive in pricing they are in reality not going to qualify and odds are they will be foreclosed on before the process can be completed. In addition these homes are often in disrepair as any one that cannot make their payment typically cannot afford maintenance costs and they are sold as-is. Bottom line is that while they look enticing on paper they are always frustrating and typically a fruitless waste of time.