10 steps to 'short sale' buying
There are too few active buyers in the real-estate market these days – but every one of them seems to be looking to buy a foreclosure or a short sale. Here's a primer on short sales and the steps you will need to take to purchase one.
Foreclosure is a fairly well-understood process, but as "short 
When a lender agrees to accept a mortgage
Everyone loses — or wins
Short sales are a mixed bag for the buyer, the seller and the lender.
If you're a seller, a short sale is likely to damage your credit — but not as badly as a
The buyer gets the property at a reduced price, but the property in all likelihood has its share of problems — think fixer-upper — and will need to go through considerable red tape in order to make the deal happen.
The lender takes a financial loss, but perhaps not as large a loss as it might if it forecloses on the property.
Before you even start considering getting involved in a short sale, there are two situations in which an attempt at a short sale is almost certain to fail:
- No default on loan — Lenders almost never will accept short-sale offers or requests for short sales until the borrower is far behind in payments and a notice of default has been issued.
- Bankruptcy — If the seller has filed for bankruptcy, forget it. Few, if any, lenders will consider a short sale when the seller has filed for bankruptcy because negotiating a short sale is considered a collection activity and collection activities are prohibited in bankruptcies.
Can it work for you?
Buying a home in a short sale can be a hassle, so why should you consider it? It boils down to the bottom line. You will get the property for a substantial discount. Since the lender is eager to continue to get paid the money it loaned out, it may also offer favorable financing terms.
