Contrary to the Real Estate Term "Short Sale", there's nothing short about a short sale! So exactly what is a Short Sale? A real estate short sale is simply a negotiation between the homeowner and their mortgage lender to accept less than what they are owed on the loan.

This means that a home owner is trying to sell their home (for less than what they owe on it), because they are getting into financial trouble, and before it goes to foreclosure. The lenders are usually willing to take less in most cases, because it's better for them to get something out of it and be done with it than to have it go to foreclosure, which is far more expensive for them in the long run. Banks do not really want to own real estate, because they are in business to own the paper (or loan) for your home, not the actual property because it's more profitable.

Of course it's always better to make your mortgage payments on time every month and keep your home and build equity in the property. Besides, it's the American dream to own your own home, so who wouldn't want to keep it? However, if you find yourself in a bad financial situation or are substantially behind on your mortgage payments and don't think you'll ever be able to catch up, which means that you'll lose the home eventually anyway, then you absolutely want to try to short sell it before it goes to foreclosure. Why? Simply because it's better than a foreclosure. Yes, your credit is still negatively affected by the short sale, but not as bad as a foreclosure. Plus if you complete the short sale transaction before it goes to foreclosure, then you are done and can keep moving forward with your life in most cases. However as in foreclosures, some lenders are also now keeping the short sale open ended and may come back and give you a note (terms of repayment) at a later time.

This question is not quite as easy to answer. It all depends on your patience level, and how quickly you need to get into another home. If you don't mind waiting weeks to months to negotiate with the banks, then there are plenty of short sales that are good deals in San Diego right now to choose from. If on the other hand you need to find a place and move in quickly, then you're probably better off finding a owner-occupied home or foreclosure to buy.

Since Banks prefer short sales over foreclosures, simple logic would state that they would move quicker on short sale offers than they do on foreclosures, and make short sales more of a priority. Unfortunately in practice, banks have been incredibly slow to deal with short sale offers, even though it's in their interest to sell them before they go to foreclosure. This can be frustrating if you are a buyer and wait weeks or months (or in extreme cases a year) to hear back from the bank on your Short Sale offer, only to hear that they don't accept it or may attempt to force the seller to accept a note. If the seller does not agree to the terms of the note, the property could end up going to foreclosure anyway. In the rare case that this happens, you have to wait for a new agent to be assigned to the home and re-submit your offer.

Technically speaking, yes. However, Short Sales are different transactions and can be more complicated than a regular sale, so it's in your best interest to work with a Realtor who has experience with them. I am experienced with the complexities of short-sales and have successfully helped both buyers and sellers in many Short Sale transactions, and would be very happy to help you as well.

If you're interested in learning more about Short Sales or have any other Real Estate questions, please contact me. I would love to be able to help you buy or sell a home in San Diego County. Moving out of San Diego or California? I would be happy to refer you to a qualified Realtor® (at no cost to you of course!) in the city or state you're moving to, and follow up with your Realtor® all the way through your transaction to make sure you're being taken care of properly.

Amy Ruiz

Keller Williams Realty

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