In these crazy times, there are a lot of real estate terms becoming more common & may need clarification. 

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A short sale means that, for some reason, the owner is in a position where they MUST sell.  Maybe someone got sick or lost their job or they got in to a crazy adjustable mortgage & the interest rate is going up & they cannot make the payments

- But - the house is not worth what the seller owes on the mortgage.

So, the owner is forced to ask the bank to take less than they owe on the mortgage.  Banks are dealing with a huge number of short sales these days.  Most often, the seller must submit a letter of "hardship"  for the bank to consider taking less than is owed.  When looking to buy a home in this market, if the house is being sold as a short sale, it does not necessarily mean that the bank has agreed to take less.  Many times, the seller & the list agent have come up with an asking price that is in a range of the current fair market value of the house. Many times the bank has not approved the asking price & may or may not agree to write off the difference between fair market value & what is owed on the loan.  It is almost like false advertising.  Banks are currently overwhelmed with the shear number of loans going into default & it may take months for the bank to even respond to an offer from a buyer.  In my experience, it takes literally months to get an answer form the bank - I know of situations where the bank never did respond, they just let the home go into foreclosure.  It doesn't make a lot of sense. 

 

A home that is already FORECLOSED is now owned by the bank.  They are also known as R.E.O.'s.  (Real Estate Owned), The bank is now the seller.  The bank will hire a realtor to research the current fair market value & put it up for sale at that price.  It has been my experience, having represented many buyers on foreclosed houses & several short sale house, it is far easier to deal with the bank on a foreclosed sale than a short sale. 

It is important to note that most sales of both short sales & foreclosed homes the words "as is" will be present in the contract.  This means that the seller is not willing to do any repairs on the house that may be recommended by the home inspector or the pest inspector.  Even then, sometimes they will, most times they won't.  Buyers must then decide, within the strict time lines written in the contract, if they can or cannot deal with the findings in the inspections.

Please give me a call or e-mail me if you have any questions about this information.  Also, click on Foreclosed Homes in Folsom on my home page.     477-0770   Mary@Golyon.com