A "short sale" is when a person is behind on their mortgage payment and owes more on the house than it's worth. They are upside down.
So what happens is they list then home for sale, and when the seller accepts an offer, which is short of the full loan amount, they hand it off to the lender and see if they will be willing to take less for the home. This is pre-foreclosure, before the bank takes ownership of the home again.
This is an absolute pain for real estate agents and buyers.
I was representing a buyer on a short sale home in San Luis Obispo. Weeks went by with no response from the bank or the seller's agent. Then the bank doesn't negotiate in writing, it's all verbal. the banks are so understaffed.
The last communication I had with the seller's agent was that they were resubmitting our offer and never heard back from her. Then weeks later I seen the listing get cancelled from the MLS, which means that it will probably show up in 3 months as an REO - Bank Owned.
Buyer's don't really understand the process either and get frustrated.
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