Condos Under $100K: House Hunt

This week's "decipher the real estate term" is one of the most confusing and misleading:  Short Sale.

Short Sale.  Sounds easy, light, fun, no-hassle, right?  Not usually!

A short sale is when a seller can't afford to pay the bank what she or he owes on the property, but wants to avoid going into foreclosure. So the seller tries to sell it for less than what the bank is owed.

Why would the bank accept a lower offer? To avoid the costs of foreclosing on the property, then owning and maintaining it.

So the seller has to find a buyer willing to pay a lower price than what the seller owes the bank, then has to convince the bank to take that price. And here the fun begins.

In the past, the banks have taken their sweet time deciding whether or not to accept a lower price, leading to the prospective buyer and seller hanging in limbo waiting for the bank to make up its mind. Frustrating for all involved!

Because the banks' sluggishness was leading to a glut of foreclosed properties, the  U.S. Treasury Department stepped in. In an effort to get things going, it ruled that banks now must give an answer to a request for a short sale within 45 days.  So limbo, at least theoretically, now only lasts a month and a half.

If you're in a hurry or have time constraints, a short sale probably isn't for you.  But if you want a deal and have time to wait out the bank's decision, a short sale can be a very good solution for all involved.  There are real estate agents who specialize in short sales and who can give you specific advice.