Earlier this year, the NWMLS decided it should make “short sale” a mandatory tidbit for agents to include in a listing. That is, listing agents have to check a box saying whether a home — ANY home listed in the NWMLS — is or is not a short sale. This tiny little morsel of the MLS cornucopia of information has mutliple benefits, such as:

• It allows agents representing investors (or owner-occupant buyers out for a good deal) looking specifically for short sales to easily identify those listings when searching the NWMLS.
• It allows agents and buyers who want NOTHING TO DO with short sales an easy way to exclude them from a list of potential homes.
• And it allows me to pull up oodles and oodles of short sales that are active, pending, and sold in the past six months, so I can tell you a thing or two (in this blog post, actually) about that sector of the market.

First, a brief backstory: a short sale is any listing that won’t generate adequate funds for the seller to pay off the mortage(s) on the home, and the seller therefore wants the lender to take a less-than-full payoff amount. (NOTE: If you’re a seller of an “upside down” listing (you owe more than it’s going to generate when sold) and you choose to bring a chunk of money to closing to pay off the balance due on the mortgages without asking the bank to take a hit, that’s NOT a short sale.)

Short sales are VERY popular right now because so many homeowners are in default — that is, they’ve missed one or more mortgage payments. In fact, as of this post, I’m seeing:

• 80 Active single family residential (SFR) short sale listings, priced from $70K to $837K…
• 97 SFR’s are Pending right now…(one of these was on the market for 954 days!!! Yikes! VERY unusual…)
• 53 have Closed in the past 6 months, County-wide, with an average time on market of 186 days, with an average sale-to-list-price ratio of (this is interesting) 97.26%! Wait a second…. aren’t short sales supposed to close for crazy low-ball prices? Don’t bank on it, amigo. In fact, if there’s one rule of thumb when it comes to short sales, that’s it: Don’t bank on it!
• Let’s check one last statistic: How many have cancelled without selling because either the seller’s lender said, “Nope” or the foreclosure happened, or in rare cases the sellers got some money together or did a loan modification and kep the house. And that count is: 44.  

So should YOU (try to) buy a short sale? Universal real estate answer: “It depends.” If you find your dream house and it happens to be a short sale, by all means give it a crack, as long as:

1) You don’t care how long it takes to close (I’ve got one that’s been pending since MAY and we still don’t have an answer from the bank).

2) You don’t care that much if you get the house, because there’s a very good chance you won’t.

3) You aren’t set on the price you offered, because you might wait months and months only to hear from the seller’s lender that “they’ll take 20% more than your offer, thank you very much.”

Short sales CAN BE a great way to get a property at a good price. Just ask yourself those three questions above before you dive headfirst in. If you can answer “Yes” to all three, Go for it!!!