What are Short Sales?

The number of short sales in Phoenix has gone up, relative to the number of foreclosures. But that is because the number of foreclosures has gone down while the number of short sales stays relatively the same.

Source: www.cromfordreport.com

But what, exactly, is a short sale? Basically, it is when a bank gives you permission to sell your home for whatever you can get and you walk away from the home with (some think) less of a hit on your credit than you would get with a foreclosure. See a more formal definition here.

Problem: that is not necessarily true. You can take a large hit on your credit score and the bank may still come after you for the balance between what you owe on the house and what you sold the house for.

The problem for buyers is time. If you are looking at a short sale as a purchase, you are looking at a house where two things have happened. 1) A listing agent and owner have set the price in order to attract buyers. 2) The bank may not necessarily have already approved that price.

So, you will wait for possibly months while the bank decides whether they like that price and the rest of the market passes you buy. If you have that kind of time to risk, then short sales can be a great option. Otherwise, they are an increased risk.

Check out the article here for more information. Or give me a call.