In a short sale situation it is important to remember you do not have a binding contract until it is accepted by the 3rd party, the bank or mortgage holders. This does not mean don’t take your obligations seriously as a buyer. It simply means the home owner does not have a right to sell the home for that price if he cannot pay off the balance owed. If he has the ability to pay the bank will not allow the sale anyway.
I have had short sales where the bank had been aware of the situation get done in as little as 2 weeks. I have also had some take 6 months of negotiation and then need to close quickly. It may take months and be declined altogether. For that reason short sale house are often sold to investors.
I have sold them as well to owner occupied client who were in a flexible rental situation and could close after it was approved whether it was in a few days or 6 months. Basically it is hard to be in an emotional short sale situation if you are selling a home and can not guarantee the short sale home will work.
The seller who is trying to short sale his home must cooperate with the bank. They must give the bank financial statements and account balances to prove they are not able to make the contracted payments. They are usually asked to provide a hardship letter to explain their situation.
They can include anything like loss of job or death of a spouse or medical bills that have caused them to be in the situation they are in. If they are current on payments the bank is not very likely to allow a short sale. Likewise if they are so far into foreclosure the bank may not allow it either. It is quicker and safer for the bank to foreclose.
Basically what I am trying to get across is that a short sale can get the buyer a good discount and save the seller from foreclosure, but will take patience and should probably be done by an agent who knows the process. Many banks require the home to be listed before looking at a short sale so they know the home has had exposure to the market and is not going to quickly sell for more.
