Short Sale Info

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Short Sale Basics

• What is a short sale?

A short sale is the sale of a property where the owner owes more on the loan than the

property is worth. Most often the owner is in default on the loan and is attempting to sell

the property before the bank forecloses on the home. The bank (otherwise known as the

leinholder) must approve the short sale, as the bank is taking a loss on the loan.

• Why do short sales take so long?

A short sale can take long (45 days to 90 days in some cases) because it takes the

leinholder time to go through the short sale approval process. The bank has a long and

involved process that includes at least one appraisal of the property to make sure that they

are not approving a sale that is letting the property go for too cheap. The bank not only

conducts an appraisal of the property to determine fair market value, they also need to get

approval from various investors involved with the bank. All in all, there many internal steps

on the banks side to approve the short sale and many internal negotiations take place to

determine the terms at which the bank will approve the short sale.

• When is the listed price really the price?

Until a bank has approved a short sale at a certain price, the list price is totally arbitrary. An

agent will take a listing and price it according to what they consider fair market value. The

bank may accept an offer made at the list price, or they may approve the short sale at a

higher price. Until a short sale is "bank approved" and is listed at the bank approved price,

the listed price isn't necessarily the price.

• How does the process work?

If you're looking at short sale, the first thing to to find out is whether the seller has already

accepted an offer. Many times homes show "available" when they're really not. A seller will

accept an offer and that offer gets sent to the bank to start the short sale approval process.

Any other subsequent offers are considered "backup" offers. The accepted...