Why are short sales so frustrating for buyers?

Most buyers don't understand what a short sale is.  In a short sale the owner of the property owns the home, not the bank or lender.  A short sale most often takes place during the time that the owner is behind on payments, but before the bank or lender has foreclosed on the property.  The time period from when the owner is in default to the foreclosure sale is about four months.  During this time it may be possible to get the bank or lender to agree to take less or “short” what is owed on the property.  The property must be listed with a real estate agent in order for a bank or lender to agree to a short sale.  The real estate agent knows that the time period before the foreclosure sale is short, so they typically list the property for substantially lower than market value to attract as many buyers as possible.  The owner is not receiving any proceeds from the sell and the real estate agent does not work for the bank so often the list price on the home looks too good to be true for the buyer and it usually is.  In essence, the asking price on a short sale is really just made up! The bank or lender hasn’t agreed to it yet and it doesn’t matter to the seller since he isn’t receiving any proceeds.  This is very frustrating for the buyer unless the buyer understands that the asking price really doesn’t mean anything and it is up to the buyer to know what the property is worth.  Another frustrating thing for the buyer is that a short sale is NOT short!  It can take a long time for the bank or lender to asses the property and their portfolio and make a decision.  In many cases it is the buyer who lasts the longest not necessarily the one with the highest offer that ends up getting the property.  If there is a second lien on the property the difficulty of the process greatly compounded since the second lien position usually ends up loosing the most. In short, short sales can be frustrating unless you better understand how they work.  The best way to approach a short sale is with a real estate professional who understands the short sale process and who can help you find the best value weather it is a short sale, foreclosed property or just a motivated seller.

Branden Kirk

Real Estae Guru and knower of all things good