This post over at Debt Kid is funny, in a macabre sort of way. It illustrates first-hand how badly you should try to avoid being the person selling short in a short sale.
In a nutshell, a short sale is a sale of a property for less than what’s owed on it. It’s meant to end up being less costly to the lender than foreclosure in the case of a default by the borrower. Short sales, though, involve much more negotiation than foreclosures because legal title hasn’t yet been transferred to the lender.
The only people for which the process is remotely pleasant is the buyers and the real estate agents. The buyer stands to get the property at below market value (one would hope) and the real estate agents stand to make commissions on the sale. The lenders are hung out to dry because they’re losing, and the seller will have his credit trashed after the transfer. But short sales often fall through because the parties cannot agree on the terms of the sale. That can make it frustrating for prospective buyers. Contrast this with buying foreclosures, which can move really fast — almost too fast — for the buyer.
Take Debt Kid’s story as a warning.