There are hundreds of descriptors in the Phoenix MLS. I’ll decode many of them for you in my blog.
As a buyer, when you see a listing with Short Sale Approval Required in the MLS remarks, be aware that there may be an additional waiting period to go to closing.
In Maricopa County, a routine closing and county recording take place approximately 30-45 days from offer acceptance. Short sale approval though might add several weeks or months to your closing schedule. If you are operating under a firm deadline to get settled into your new home, consider that a delay could affect aspects of your loan closing like the interest rate lock expiration.
A short sale occurs when a seller’s lienholder (lender or mortgagee) agrees to take less than what is owed at the time the property is sold. In this scenario, the homeowner has marketed the home but cannot attract any offers higher than the amount required to pay off the home’s debt and selling expenses. For example, a seller owes $220,000 on a home loan. When he receives offers of only $180,000 or less, the seller cannot satisfy the debt obligation at the time of the sale. He requests that his lender accept less than what is owed.
Short sales were very common in the environment of collapsing home prices during the Great Recession. These type of transactions are less common now that the real estate market has strengthened. Today, formerly “underwater” sellers are likely to break even or make money on their sales. Despite this encouraging market shift, short sales are still present in our market. Slightly less than 2% of homes around Greater Phoenix are short sales.
The seller’s mortgage lender is the final word on the approval of your offer, not the seller. The lender may or may not agree to take less than what is owed on the home. While the creditor is looking at the seller’s financial situation and examining all available offers, you will be required to wait patiently for a response. Other competing offers may trickle in while your offer is being considered.
In the event that there are multiple liens on the home (a second mortgage, for example), expect an extended wait as there are two lenders to negotiate the loss between themselves.
Patience is bitter, but its fruit is sweet. – Jean Jacques Rousseau, 18th-century philosopher whose writings influenced the Enlightenment across Europe