How Do You Define Real Estate Short Sales
How do you define a short sale? Because technically you don't have a short sale until it comes to closing and there is not enough money to pay off the lender.
For example, a house may be listed for sale at $500,000, and the outstanding loan amount may be $490,000. If the offer is above the loan amount then the property would not qualify as a short sale. There has been an inconsistent definition of a short sale, and what needs to get done is to determine when a short-sale should be disclosed.
Awaiting lender approval of offers on short-sale, foreclosure and REO properties can be a lengthy process because of the volume of distressed properties that banks and the asset management companies are working with these days, and agents may want to know up-front whether a property could be tied up in a court process or that they won't hear back for several weeks on whether an offer is approved.
In California, the status of properties is complicated by two types of foreclosure processes: the judicial foreclosure process and trustee sales, and each process has its own set of rules.
Some properties that are bank-owned or could end up as short sales are not publicly marketed as such, and the banks may have specific directives about how to advertise and not to advertise the status of properties to consumers. If a property is prematurely labeled as a short sale, that could potentially attract low offers.
On the flip side, prospective buyers want to know about the status of the properties that they could potentially purchase.
A working definition of a short sale, needs to bne defied. A short sale is a sale in which the title transfers, the price is insufficient to pay the total of all the liens and costs of the sale, and the seller does not bring sufficient liquid assets to the closing.