"Short-sale" is the term used for a property that must be sold for less than what is owed to the lender by the current owner. Basically, sellers and buyers must recognize that a "short-sale" is anything BUT short. Short sales can take weeks or months to finalize. Some attempts at selling on a short-sale never come together,even if there is an interested buyer who has made an offer, and the home may actually foreclose.

INVESTORS/BUYERS
If you are an investor looking for investing opportunities and a short-sale home is of interest, be prepared for it to take months for a contract to be accepted. Often times there will be multiple contracts from multiple would-be buyers in the lenders hands at the same time. And know that often times lenders are not accepting any contract on a short-sale, but instead letting the home go to foreclosure.  As an investor, it is critical that you understand the price listed in the MLS for a short-sale property most likely is not the price that will be accepted by the lender. Prices for short-sale listings are just a best guess at the current market value, and in most situations have not yet been approved as "the" price the lender will accept.

SELLERS
If you are a seller who needs to sell and you owe more to the lender than what the current market will allow you to sell your home for, you will want to discuss your situation with your lender to find out if they will consider you to be a candidate for a short-sale. Whether a lender will consider a seller a candidate seems to change as the market changes. As a seller, you will need to convince your lender that you have an extreme hardship and cannot continue making your payments. The lender will want to know what has changed since you originally purchased the home to create this hardship. The lender will require the seller to provide a number of financial documents as well, including past tax returns, pay stubs from work, budgets indicating how their money is beign spent, etc. These documents vary lender to lender. (Note - if you have a first and a second loan make contact with both of your lenders.)

Unfortuantely sellers are finding that because of the length of time it takes for lenders to go through their processes of bank-price-opinions, appraisals and all that has to go into the process of determing a short-sale and getting the property to close escrow, buyers are often being turned off to even looking at short-sales, and instead looking at foreclosed properties, if the buyers are "looking for deals".

If you are a seller in this position - do not make the mistake of waiting to speak with your lender until your lender is close to making a foreclosure of your home. If you are a seller who finds themself in financial trouble and in this position, call your lender and begin a dialogue as soon as you find yourself in trouble of making the monthly payments.

Sellers in this situation should always also consult with an attorney and a tax professional to determine how a short sale will affect their credit and tax situation.

Remember what a short sale is. "A short sale occurs when a property is sold and the lender agrees to accept a discounted payoff or less money than is actually owed."

"As one part of our marketing activity, we send mailings to the owners of properties that have been on the Multiple Listing Service (MLS) for over 180 days," I remember hearing my investment partner say to one of the realtors with whom we were cultivating a partnering relationship, at an introduction meeting with his broker. We had, back at that time, been working with this realtor for just a few months. His office's new broker, it turned out, was a seasoned investor-aligned realtor and the introduction was set up.

We were caught off balance when the broker chuckled at this statement. It was, after all, a piece of common wisdom for those involved in the sport of real estate investment that my partner had just presented. The broker smiled and stated, "No realtor worth his salt will let a listing go past 90 days on the MLS. Days on market (DOM) entries are unreliable. If you see something that is past 90 days it means either the listing broker does not know what he is doing, or that the realtor and the owner of the property don't care or don't really need to sell it."

Over the last decade, the high home appreciation and low mortgage interest rates have enticed buyers to become real estate speculators (flippers) and not long term real estate investors. Unfortunately for speculators, the real estate market today is not lucrative for making quick profits.

While home appreciation has slowed and inventory on the market is rising, real estate investors are looking to a "buy and hold" strategy.