Short sales. No, they aren’t sales that close quicker than the standard 30 days (by Bay Area standards). In a nutshell, a short sale is when the amount the borrower owes in loans is higher than what the property would sell for. Many lenders will allow the property to be sold for less than the amount owed on a mortgage and forgive the rest of what is owed.
Why on earth would a lender agree to such a thing?
Banks are in the business of lending people money, not owning their homes. By agreeing to a short sale the lender can avoid a lengthly and often costly foreclosure, with the owner paying off the loan for less than what is owed on it.
Each lender will have its policies and procedures for handling a short sale and the process can be lengthy, sometimes taking up to 3 or 4 months to complete. They will want a plethora of documents, so for those unorganized folk out there, you may need to hire a personal organizer to help you sort through everything. Most won’t even begin the process until there is an offer on hand.
Alameda and Contra Costa Counties have been deemed “declining markets” by the lender-powers-that-be. Oh man. That doesn’t sound so good. And it appears that areas of declining markets are also areas high in short sales. This does not bode well for Oakland, one of the leading cities in both foreclosures and short sales.
Up against the possibility of a short sale? First step: call your bank.
Now this is some scary juice.