What is a Short Sale???

Posted by The Lohser Group Cleveland on Saturday, March 13th, 2010 at 6:12am.

Many terms like short sale and foreclosure are thrown around these days to the general public without much explanation of the pros and cons...  Here are my two cents on the subject.

I know everyone feels like everyone else is getting steals on properties that have been seized by the bank, picking up property at pennies on the dollar.  Well, some of this is true but its not the entire story. 

First of all the definition...

A short sale is an agreement by the bank, who holds a seller's mortgage, to take less for the house than what the seller owes.  Since going through the entire process of forclosing on a property is actually extremely expensive to banks and often results in a property being vacant and even vandalized, a short sale is seen as a kind of win-win.  The seller avoids the emotional and financial risk of the foreclosure and the bank is able to cut their losses sooner while probably netting more in the end then they would if they seized the property and later sold it at Sheriff's Sale. 

How does this help you?  Well, since the seller could care less what the property sells for now that they aren't going to profit anything anyway, and the bank will take a number just high enough to cover their expenses, the deals are quite often great!

The downside is this... it takes FOREVER!  Forget about a 30..60.. or even 120 day close in some cases.  Once you reach an agreement with the bank, your file goes to the bottom of a huge stack of other files in the portfolio.  No customer service, no rushing to answer questions for you.  Sure, I or your realtor, will try and do what we can but its really out of our hands in the end. 

So at the end of the months of waiting you will finally close, in most cases, and have gotten a great house for a great price, just be prepared for the downside. 

This follows the general rule in life that there are two sides to every story and things are rarely perfect.
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