What is a Short Sale?

A short sale is a transaction that involves selling a property for less than the amount owed on the mortgage.  It has grown in popularity as an exit strategy for financially strapped homeowners because it doesn’t hurt your credit report as deeply as a foreclosure.   It is also a favorable out for the mortgage company to utilize in that it is a quick way out of a bad loan.
The problem lies in that prospective buyers must have patience that short sales require.  The process from offer to closing can take upwards of 6 months and few buyers can afford to wait that long when extenuating circumstances influence decision making over potential dollar savings. It may too take up to 3 or 4 months to hear from the lender as to if they will accept your offer.  And if and when they do, you may have to close in as few as 10 days! From a prospective buyer’s standpoint, purchasing a short sale property can be preferable to a foreclosure because if the borrower stills owns the home, he or she is likely to take better care of it.
With so many distressed properties for sale in the Chicagoland area and other homes selling conventionally at drastically reduced prices, there’s a wealth of inventory available allowing buyers to get a quick yea or nay to their offer.  A few potential buyers will make multiple offers on multiple short sales or write the offers so they can walk away if a lender doesn’t respond within a certain time frame.  This is the catch when attempting a short sale: you must be dilegent and patient.
If you are a potential buyer looking into a short sale purchase, be prepared to utilize all your patience.  You can also forget using the $8000 federal tax credit towards a home purchase even if you’re looking a straight up transaction.