Short Sales may not be so Short!

Let's face it, there can be a lot of misleading terms and concepts in the real estate industry. Whether or not that is a part of the current state of the market is a matter for another analysis, but one thing is for sure: buyers and sellers need to have a better understanding of the language and the procedures of the industry before confidence in it can truly be restored.

One big misnomer in the world of real estate is the short sale. In fact, this term often misleads buyers and sellers in both meaning and concept, a double whammy for the people whose money is truly at stake in transactions on the market.

Let's start with clearing up the simpler issue first; the name. The short in short sales refers not to the amount of time it takes to put the transaction through, but to the amount of the sale itself. Short sales are homes sold at less than the owed mortgage account, after an agreement has been made between the seller, buyer, and lender.

This makes sense when one considers the actual process of the short sale, which by no means takes a small amount of time. In fact, many short sale homes can take months to complete, even in today's sales hungry climate.

The reason is that negotiating a short sale is an involved process, from the initial groundwork right through to the signing of the final agreement.

First of all, anyone interested in buying a home at short sale needs to know which homes on the market are potential candidates. It's rare for a home owner to advertise a home as a short sale, as most are still hoping to get at least the mortgage value out of the sale. Instead, buyers must carefully look at the market and the financial situation of home sellers to determine who might be ready to try a short sale.

After finding the right property, a buyer must then have the house inspected, in order to uncover any outstanding issue. These are not uncommon in distressed homes, so forego an inspection by no means!

Finally, an offer can be made on the house, but it has to be approved of by both the owner and the lending institution. It's at this point that the transaction officially becomes a home sale, as the lender decides whether or not to allow the sale and forgive the owner the extra amount.