A short sale can occur when a property  owner with a mortgage owes the bank more money than the property is currently worth and the owners do not have the money to pay the difference at the time of closing.

This usually occurs when the owner purchased the property when the values could have been 30% to 50% higher than they are today. The owners are asking the bank to lose the difference and not expect the owners the repay the bank for their loss. Banks will usually only agree to this if the owner can find a buyer that is willing to pay a price that is acceptable to the bank. The owners must be delinquent in their payments to the bank and the property must be offered for sale on the open market for a period of time. Owners must also prove that they do not have the ability to pay for the loss. Banks must determine if it is better for them to accept the loss or to foreclose and sell it themselves.

One might assume that the banks would be willing to lose some money to avoid the cost foreclosure and the money it looses in taxes and fees until it can sell the property. This would be logical, but it has been my observation that banks demand more than the present fair market value of the property. This is because they are considering how much the owner borrowed and the total loss is far greater than the cost of foreclosure and marketing fees for the property.

If the bank accepts a short sale they lose the total amount owed and they lose the ability to recover the total amount of the money owed. If the bank forecloses on the property they can still sue to recover their full loss. Only if the owner claims bankruptcy can the owner avoid paying the bank. Most country club property owners in this situation do not claim bankruptcy because of the damage it will do to their credit worthiness. Most want to try to find a buyer thru a short sale and they want the bank to absorb the loss. I can see why banks are not thrilled about short sales!

Short sale properties are almost always offered in "AS-IS CONDITION", which means that neither the owner nor bank will repair ANY problems to the property. The buyer usually is allowed to have a home inspection, at the buyers cost, but the owner and the bank will NOT repair ANYTHING. This  lack of repair from the owner or the bank often encompasses all mechanical items, structural defects, electrical, plumbing, roof, pest extermination, mold, radon, etc..

Normally, a clear title is the only guarantee provided to the buyer.

Most Short Sale owners advertise a list prices far below the NORMAL MARKET list prices. Owners do this to entice a prospective buyer to become interested in the property and to make an offer to purchase it. The purchase contract is then submitted to the bank for the bank's consideration and the bank then usually makes a counter offer for both price and terms. The owners listed price is usually far below what the bank is actually willing to accept to sell the property.

While only the bank has the ability to accept a price for the sale of the property, the bank is not allowed to set the listed price, and the owners that sets the list price does not have the ability to accept an offer to sell the property. This is a crazy system and this is another reason why banks hate short sales.

So, even if the buyer agreed to paid the full list price, the owner does not have the ability to sell the property at the advertised list price. The bank must determine the acceptable price and terms. The buyer may come to an agreed sales price with the owner but the bank can stop the transaction even up to the day of the closing.

Very seldom does the owner have any idea of what price the bank will actually accept for the property.

The bank determines what they are willing to lose, NOT the owners.

Most of the time it is better for the bank to foreclose on the property and then list it themselves thru the local MLS Realtor system. At least the bank would be able to list it at a price they were willing to sell it for.

Because the banks are drowning in short sales and foreclosure properties, it is not uncommon for the bank to take several months for them to respond even to the initial offer from the buyer to purchase the property. To actually close on the transfer of the property  can take more months as well.

Most buyers think they are going to save a lot of money by becoming involved in short sales They quickly realize that this seldom occurs. In a declining market, the time it takes for the bank to close on the transaction, many of the original properties that were originally  priced higher have now been reduced below what the buyer originally agreed to pay to the bank.

Very few of the short sales that make it to a sales contract ever actually close, and the buyers seldom come out ahead.

These are the reasons why I decline to list ANY short sales!