If by short sale you mean looooooooooooong sale...

Let's get educated on today's hottest real estate buzzwords: Short Sale.

What it means for a seller. A short sale occurs when the total liens against the home (mortgage, 2nd mortgage, home equity loans) exceed the final sales price of the home. Kind of like being "upside down" on a car loan-- you want to sell your '05 Mazda, but you owe more on it than you can get. In the case of a short sale, the seller is requesting that the lender(s) take less than what they're owed, because they lack the funds to make up the difference. Why would a lein holder accept less? Well, it's a hell of a more attractive proposition for them than a foreclosure. It will have an impact on the borrower's credit, however the credit reporting bureaus are characteristically vague on what specific impact it will carry.

For a buyer, the term "short sale" could not carry a more contradictory implication. Short sales can actually take quite a long time to get to settlement. This occurs as the lender(s) mull over the offer before them, evaluate the impact acceptance of the offer will have on their institution, and continue to seek other (re: higher) offers. A short sale can take 30-120 days to clear lender approval. In a typical environment, this may not be a huge problem. Unless it's a relocation scenario, typically the buyer has a place to live for that duration of time, and though they may be antsy to get into their new digs, it's not a desperate situation. However with the clock ticking on the First Time Home Buyer's tax credit, there is a new objection to overcome in the short sale market. In order to be eligible for the +/-$8000 credit, settlement must occur prior to December 1. So if you write an offer today, August 17, on a short sale, you should be able to get in under the wire....but you may not.

That's not to say a short sale should be avoided. There are distinct advantages to purchasing a short sale. Since the seller's agenda and emotions have been largely removed from the decision to accept an offer or not, there is sometimes an opportunity to get the home for a lower price than you may have been able to otherwise. To the contrary if the seller is on the edge of a potential short sale and wants to avoid it in favor of settling quickly, there may be little to no room for negotiating on price.

As usual, the best route is to consult a Realtor to assist in determining what is best for your unique situation.