What does a short sale mean and what should I know?
Whether or not it is something to be concerned about depends on your circumstances. It means that the house us going into foreclosure, the owners are currently behind on their mortgage payments and will need to make a deal with the bank to accept less than the amount owed.
It may be cause for concern for many reasons the first one being that there is no guarantee that the bank will accept your offer or even agree to the short sale. If they do decide to accept the short sale, the process typically takes approximately 6 months to close. The list price is not necessarily the price that the bank will accept, we just make an educated guess and list it. In every case that I have seen, and I have personally negotiated a lot of short sales over the years, the bank counters with their own price which is always higher than the list price.
How the process works is this: As agents we know the bank will usually accept a percentage of the amount owed (around 75% - 82% of the amount owed to them)so when we list the property, we list it based on what other similar short sale properties went for but as I said this does not mean that the bank will agree. We are not privy to the amount that any bank deems acceptable so once we receive an offer, we submit it to the bank and wait for them to get back to us. This is usually a three week process just to hear back from them. After that there are many, many other steps to go through and it requires that we are constantly on top of dealing with the bank which is a complete exercise in frustration and sometimes futility. It is just a long and arduous process and we have to hope that the buyers will hang in there for the duration which a lot of times they don't. Bottom line is, if you don't have 6 months to wait for this to go through to close then I suggest that you find another more readily available property.
Thank you to Dylcia Cornlelious and this extraordinary response.
Gateway Real Estate of Fort Myers