Short Sales in Santa Cruz Real Estate Demystified

Posted by Lauren Spencer on Friday, October 28th, 2011 at 11:01pm.

If you're a potential buyer of Santa Cruz real estate, when scanning the listings of homes for sale, you may see references to “short sales.”  You may hear vague warnings about avoiding short sales from some people, while others tout the advantages.  So who is right?  Well, it depends…

Short Sales Defined
First, what is a short sale?  A short sale is a situation in which the current market price of a home would not, in fact, cover the amount the home owner owes on the mortgage.  Yes, that's what people mean when they say they are “underwater” – they owe more on their home than it is worth.

Since the mortgage can't be paid off by the sale of the house, short sales become an option, albeit a complicated one. The seller and the bank (or banks, as is sometimes the case if there are multiple mortgages on the house) become, if the bank agrees, essentially co-sellers of the house.  Any offers considered by the seller have to be approved by mortgage holder(s).

Seller Short Sale Advantages
Short sales can be a win-win situation for the seller and the mortgage company. The seller is relieved from his debt without the greater stigma of foreclosure attached to his credit standing. The mortgage company often gets more money than it would in a foreclosure auction, and without the time and expense of the foreclosure process.

Buyer Short Sale Advantages
For potential buyers, short sales can have some advantages. The biggest possible advantage is a better price. Keep in mind though that short sales are seldom amazing deals. The bank will usually do an analysis on comparable properties in the neighborhood, and will likely turn away any offers that fail to come in that range.

What you are more likely to get with a short sale purchase is a home that has been cared for and recently lived in.  Short sales are still officially owned by the seller, not the bank (as in foreclosures), and so someone is more likely to be living there, mowing the lawn, cleaning the kitchen and making repairs.

Short Sale Buyer Complications
The bad news on short sales is time and administrative detail. With the companies holding the lien having final say on the process, their review can delay acceptance of short sale offers, sometimes for months. And, of course, if there are multiple lien holders, the time can increase dramatically. A short sale can take three months – not much longer than a standard closing – but they can also take six months or longer.  If that level of timing uncertainty doesn't work for you, you might want to consider other options in your quest for Santa Cruz real estate.

Whether you’re considering buying or selling a short sale, I can help. Give me a call today at 831.662.6522 or email me at for more information.

For additional information, please visit my website at


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Delay acceptance of short sale offers



About Lauren Spencer

Award-Winning Santa Cruz REALTOR®

Lauren Spencer is your local real estate expert, specializing in Santa Cruz real estate and surrounding communities—this is where she lives, works, and plays too. Let her know your questions about the community and county and she'll be happy to fill you in on all you want to know! Lauren Spencer has consistently been voted best local REALTOR in Santa Cruz and is always happy to offer her advice and expertise. Call her at: 800.226.4717.

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