I’m attending a short sale closing this afternoon. This property went under contract, its first contract, around January 15^th in the year two thousand and eight. And when that initial buyer went away because the bank’s BPO came in at 13,000 dollars over our full price offer (which translated means that the bank felt the full price offer was 13k too low), thankfully a back-up contract had anticipated that such an appraisal event might happen and was ready to take over in first position - back in early April of the year two thousand and eight.

 

So here we are, on the precipice of closing this contract August 26 of the year … well, you see where I’m going here. The “short” part of a short sale does not appear to correlate with the length of time it takes to close the deal. In fact, some statisticians report, nearly two-thirds of short sales never close at all.

 

This is because the oldest children in the buyer’s family have since graduated from high school and are settled in dorms and who needs a four bedroom anyway, even if it was a great value and seemed worth the wait back in the early months of the fine year 2008.

 

Seriously, though, even when the bank’s appraisal comes in over the listing price of the property it may be a very good real estate value and indeed worth the waiting - for the seller because it spares the owner a full-fledged foreclosure hit to his or her FICO score, and it’s worth it for a buyer with LOTS of time and patience as the price is usually under market – even this market and even when the bank jacks it up!

 

The “short” of a short sale is of course that the bank is taking a short pay - that is they are taking less than what is owed to relieve the owner of his or her mortgage note (which can be justified numerous ways).  Therefore, ALL short sale deals are contingent upon the bank’s approval of the sale price as the bank is the one sucking up the shortage. And there are TONS of hoops to jump through to accomplish this acceptance. Over the course of most contracts, the short sale “work-out package” accumulates into a three foot thick manila legal sized file folder made possible only by the felling of 18 California redwood trees.

 

Will the property I’m representing actually change hands today - some seven short months after the initial offer? Documents and ducks appear to be lining up nicely along side the closing table. For now. And so hope lingers for the next two hours.

 

Great relief for the seller and a lovely, equity-abounding new home for the buyer sit quietly and wait. And wait. It’s what they do. It’s a short sale.