The Short Sale Legend....
 
What exactly is a short sale?  Well a short sale occurs when a property owner is unable to sell his home at a price to cover his loan amount. He then must go to his bank or mortgage company and ask if they will forgive the difference of what he is able to sell his home for and what is actually still owed on the house. This now puts the bank in a position to dictate the terms of the sale. Currently this process has been painfully slow (we're hoping this will get better) and many deals have gone by the way side while waiting for a response from the bank. There is a lot of work that must be done before a bank will say "OK, you are off of the hook", and beware there may be some tax liability owed on that amount. So why would a property owner choose the short sale route over a foreclosure? Either way the seller walks away with nothing.  Well according to Fannie Mae's guidelines to re-establish credit, there may be some benefit there - a bankruptcy will take 4 years, a foreclosure 5 years, but a short sale may take only 2 years.  This will allow the property owner a faster track to picking up the pieces and getting a fresh start, while avoiding the stigma of a foreclosure.
 
How does this affect a buyer looking to purchase a home in short sale versus a foreclosed home?  There will be more selection of short sale offerings. And because people are still living in the house it is well cared for.  As I mentioned earlier short sales will take a lot of patience waiting on the bank as they work they way through the enormous stack of pending short sales to come to a decision of whether they are willing to accept your offer. This is where an experienced agent comes into play. If they have submitted a complete package with supporting documentation on comparable pricing and sale history of the neighborhood basically explaining to the bank that this offer is in their best interest then perhaps your offer will be accepted. They may counter back with a different price or terms. While your offer is sitting there waiting to be reviewed it is possible that another stronger offer may be submitted.  Obviously the longer it sits more things can happen.
 
Foreclosed homes now owned by the bank, referred to as REO's, generally move more quickly. These homes may have already moved through the short sale process without consummating a deal or perhaps the property owner never tried to sell the home. They will be sitting vacant and uncared for. Sometimes disgruntled owners destroy the home or strip it of all the fixtures and such. The banks will only make the necessary repairs and price it accordingly to get a timely sale. They are very motivated and realistic at this point, so a good deal may be had. Do keep in mind however, either way you go, don't expect any participation from the bank or sellers on repairs and there will be no responsibility on their part down the road should any problem arise with the property.  

Kappy and Jennifer have a combined 38 years in the Real Estate Profession.  We are committed to giving our clients the most up to date Real Estate information and Stellar Service because, We Love Our Work and So Will You!  Call us or e-mail us for information about the Tahoe Truckee Real Estate Market.