Where Short Sales Stumble

"Jenny, what is the difference between a Short Sale and A Foreclosure?"  This is a question I hear often.  A Short Sale is a sale where the owner owes more than the house is worth, so they are coming up "short".  The owner still owns the home.  In a Foreclosure, the Bank has taken back possession of the home.  If you are a buyer, BEWARE OF THE SHORT SALE.  In order for a Short Sale to sell, the bank must APPROVE the (huge) loss of money.  So, if someone purchased a home with 100% financing in the hay-day at $450,000 and today it's only worth $250,000 (yes, this is a real life example), they put it on the market as a short sale and pray.  They pray that the bank will accept the, in this case, $200,000 loss.  Most of the time, they do not.  It's further complicated when the buyers took out an 80/10/10 loan, or an 80/20 (remember those??) and there is more than one "trust", or lien-holder.  Basically, if you make an offer on a short sale, be prepared to wait months or even years for an answer.  Even then, what I see is that the home goes into Foreclosure before the short sale can be approved.  And, often times, it comes on the market at a lower price than the short sale was.  So, all in all, my advice is to stay as far away from Short Sales as you possibly can!!