myth about short sales

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I regularly receive phone calls or emails from potential home owners wanting to know more information about short sales. A common statement I hear is “I want to get a good bargain and into a home fast, so a short sale seems to be ideal.”

I usually follow up with a clarifying question asking what they know about short sales, and the typical response is – “they are called ‘short’, so the process must be quick.”

For those of you who have been through a short sale process, you know buying a short sale is anything but “quick.” Depending on the article read, short sales average about 6-8 months to complete.

Why this misconception? People hear the word “short” and believe the word refers to time. In this application, “short” refers to the bank that owns the home. In a short sale, the bank that owns the home allows the current home owner to sell it for less than the amount owed on the mortgage. The owning bank “shorts” itself on the funds received at closing and writes off any unpaid balance.

That process is where the term “short sale” originates, and is also why short sales take so long to close. It isn’t the buyer’s bank or even the seller that typically delays the process. Instead, it is the bank that owns the mortgage on the subject property that slows everything down. It isn’t intentional per say, but it takes time to get approval to sell a home for less than the amount owed.

My advice to anyone looking to buy a home, get a good deal, and close in a hurry is to go through the traditional retail purchase scenario (buy the home from the current home owner who isn’t looking to sell it as a short sale transaction). With all of the great and available homes on the market, buyers will be able to find the home of their dreams, get it at a good price, and close on the home in a timely fashion.

Ready to get started with the prequalification process, if you are in Georgia, I’m ready to help. Give me a call or email me to get started!

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One Response to “myth about short sales”

  1. types of home purchases « The Mortgage Blog Says:

    […] Mortgage Blog Professional, Honest Mortgage Advice from Dunwoody Mortgage Services « myth about short sales are the rumors true? […]

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