Though an outright foreclosure is by far the worst experience for a seller, short sales are one of the most unpleasant experiences a buyer (and Realtor!) can experience. Recently the National Association of Realtors distributed a quiz for agents to figure out how much they know about these transactions. I missed one because it was a trick question! But here are some of the quiz results:
What is a short sale? When a listing sells for below the amount the seller owes on the mortgage.
When is a short sale accepted? (This was the trick question) When a contract is formed between buyer and seller. It’s tricky because short sales have to be approved by the lender – they are agreeing to accepting less than what is owed, so my answer was when the lender approves the offer. However, the lender can’t sell what’s owned by the seller so the contract must be between the buyer and the seller.
Some of the potential downfalls of a shortsale was the last question and these are both correct answers: The short sale can negatively impact the seller’s credit score and the seller may have to sign a note promising to pay back the remaining mortgage debt.
I don’t like short sales, but they’ve become a fact of life in today’s market.
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