In recent years the terms “short sale” and “foreclosure” have become buzz words amongst realtors, investors, and the public. It is very important to know the difference between the two when searching and considering putting an offer on these types of properties. Just simply knowing the difference can assist you in many ways of the process further helping you become successful in purchasing the property. A short sale is when a lender agrees to take less than what is owed on a property. This can be a longer than expected process in most cases. It is important that you understand the short sale process before placing an offer so you do not waste your own time. First thing to remember is that the bank does not own a short sale. The bank is only a lien holder of the property and the seller is still the seller in the transaction. This is the most common mistake when making an offer to a seller on a short sale. The seller remains the seller of the property until the title of the property is transferred via foreclosure. Many people tend to think that all offers must be presented to the bank when they must be presented to seller only. If the property does get taken back through means of foreclosure then it will become bank owned.
A seller has the ultimate decision on what offers the bank sees since they still remain the seller of the property. Believe it or not, but if you find yourself in negotiations with a seller in this situation and the bank counters your offer they technically do not have the power to do so since they are not the seller. The bank is countering the payoff or net amount they will be receiving once they the short sale is closed. While this happens all the time just keep in mind that the bank is only approving a payoff to the property. If conducted correctly this process should take between 60-110 days depending on what banks are involved and who is conducting the process.
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