Short Sale – What Is It?

Short Sales

A few points on Short Sales

  • The term short sale has nothing to do with the length of time it takes to complete a short sale.
  • The term short sale comes from the bank and refers to a shortage in the funds the bank receives at the conclusion of the sale.
  • The average short sale takes much longer than a normal real estate transaction due to the time it takes for banks to respond to offers.
  • There can also be circumstances that hold up short sales due to the seller not providing all needed items for the short sale package. Banks won’t normally review anything until they have received all of the necessary paperwork. Sometimes even when all of the paperwork has been turned in, it will be outdated by the time the bank looks at it and they will ask for updated information such as current pay stubs and bank statements.

Short Sale Terms (usually associated with listings)

  • Subject to 3rd Party approval
    • The 3rd Party refers to the lender or bank. There can be more than one lien or lender involved in the transaction i.e. the seller may have a second mortgage.
    • Under 3rd Party Review
      • This term normally means that the Seller (owner of record) has accepted an offer and it has been submitted to the bank for approval. In this situation:
        • Some sellers will request no more showings.
        • Other sellers will continue to have showings.
        • Backup offers can be made.
          • If no more showings has been selected you may still make a backup offer subject to inspection.
  • Normally while the offer is under third party review the listings still show “active”
  • If the bank has accepted the offer it will normally show as “under contract” and will most likely not show up on most websites.
  • Seller
    • The home owner.
    • Third Party
      • Normally the bank that holds a lien or note for the mortgage on the home or property,
      • Any secondary mortgage or lien.
      • Negotiator
        • At times the Sellers Agent or the Seller will appoint another party to negotiate and follow up with the 3rd Party. Normally there is a fee paid to the negotiator at settlement.
        • Sellers Agent
          • Acts for the home owner and is given permission to negotiate with the bank or lien holder on behalf of the Seller.
          • Buyers Agent
            • Acts on behalf of potential purchaser of the property and negotiates with the Seller’s Agent.

The 3 most important words in Real Estate Location, Location, Location