Recently there has been more discussion about short sales and foreclosures. A foreclosure is a forced sale of real estate to pay off a loan on which the owner of the property has defaulted. The lender now has title and can sell the property. A short sale is where a seller may be in the first stages of foreclosure (difficulty making their payments) and they owe more than the house is now worth. In a short sale, the lender or bank has to agree to accept a lower price of what is owed even though they do not have title. In most short sale situations, the owner puts the house on the market hoping the bank will agree to a settlement and forgive the rest of what is owed on the mortgage.

Those interested in short sales need to be aware that it is a lengthy process and there are often additional expenses (i.e. other liens on the property) that are usually wiped out during a foreclosure. A short sale usually takes 2 to 6 months to complete and typically the only short sales that work are the ones where the bank agrees to before the property is listed for sale. While it might seem to make sense for the bank to take an offer that is lower than what is owed, reasons they will not are often they already have an abundance of short sales and they do not have the staff/resources to handle more.