For those of you uninitiated into the drama called a "short sale," I thought a little primer might save you from some of the headaches we've experienced over the past two months:
1. Short sale = home owner wants to sell the house to a buyer for less than he owes the bank (because he can't find a buyer to pay more and he has to sell)
2. Short sale contract - must be approved in writing by seller and the seller's bank (usually takes about 3 months)
3. Foreclosure auction - what happens when the foreclosure dept at the seller's bank doesn't realize there's a short sale in the works; the bank offers the house for sale on the courthouse steps for the amount owed by the seller plus fees; must be published in local newspaper for 3 weeks prior to auction; if no one buys the home at auction, the bank puts it for sale on the market (w/a realtor); can be postponed by the bank's short-sale dept if they are reached in time
4. Liens - a seller headed for foreclosure often has other bills he wasn't able to pay so there may be "liens" against the property besides just the primary mortgage; this is why you probably want a lawyer to help you navigate the short sale and avoid future liability
In our situation, we signed a contract with the sellers in May, but we still haven't received a response from their bank. That's supposed to come soon, but until we have their approval, we can't buy it. Hence the househunting, homelessness, and disorientation...
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