What is a Short Sale? This is by far the most popular question I’m asked on a regular basis by Wellington Florida Home Buyers.
A Short Sale is when a seller owes more than their home will sell for in today’s real estate market and they ask their lienholder(s) to accept less than what they owe.
Just like some buyers make the contract contingent on loan approval a short sale seller will have their own contingency of short sale approval. As mentioned above the lienholder(s) have to agree to accept less. Some lienholder(s) will agree to accept less with or without conditions or additional terms and then there are lienholder(s) who will not approve the short sale at all.
Unfortunately the word “Short” in Short Sale does not refer to the length of time it takes for a short sale to be approved or denied, it refers to the “shortfall” of money. In my experience the average short sale takes 3-9 months to be approved or denied. There are several factors that can speed up or slow down a short sale approval or denial.
To date the fastest short sale approved transaction I’ve been involved in was approved in 30 days. Wells Fargo was the only lienholder and the seller was current on their monthly HOA dues. While the longest short sale approved transaction I’ve been involved in took almost 10 months. There were three lienholders on this sale; RCS, Green Tree and the sellers HOA since the owner was not current on his monthly dues. I’ve also been involved in short sale transactions where the seller was not approved or approved with conditions that the seller did not agree to. Usually the more lienholders the longer the approval or denial may take.
If you are a home buyer interested in purchasing a short sale make sure you are prepared not only to wait, but wait and possible not get the home. If you are not willing to wait I highly recommend pursuing traditional sales or Bank Owned (REO) properties.
{ 3 comments… read them below or add one }
LOL I like how you mention short doesn’t mean length of time! It is imperative that buyers should hire a buyer’s agent who can educate them with this process & is experienced with short sales!
I’m with Renee. They should call them “long sales”. Great explanation, Michelle.
Great article Michelle – unfortunately, they are here for a while. We just all have to do the best we can with the short sale market.
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