A “Short Sale” means that the owner owes more than the home is listed for and is trying to sell it short of what they owe. The lender who holds the mortgage would have to approve the lower amount in order for the sale to go through. In addition to that, the seller would have to provide the lender documents proving that they have suffered a financial hardship.
The process can take up to 3 months or as long as 6 months from the time an offer is submitted to a decision is made on a property by the bank…occasionally it is less time. It just depends on the bank. Some banks are offering the seller the option to have their loan modified instead of selling it short. The risk for the buyer who makes in an offer is that if escrow was opened on the purchase and the buyer has incurred costs like an appraisal or home inspection and the seller chooses to modify their loan with the bank, then the seller may want to cancel. That may raise legal issues.
- Short sales can take up to 3 months or as long as six months to close escrow, so you need a lot of patience.
- Some banks are willing to grant the seller a short sale and some are not
- The seller may decide to accept the loan modification from their bank