Are There Different Types of Short Sales? Thank you for asking this question. Yes, there are different types of short sales. A few years ago, we wrote a blog post explaining what a short sale is. Since then, we've represented many sellers and buyers in short sale related transactions. Please know that before reading further, there are many different scenarios for each short sale we run in to - some are easier to complete than others. However, there are 2 major categories of short sales: A "Regular" short short and a "Sponsored" short sale. In the simpliest, broadest terms, here is how they differ:
- "Regular" Short Sale: This when you need to sell the house and the short sale process is started by the owner or their representative (attorney, Realtor, etc). These typically take a long time to complete because the lender is slow to respond. There is no monetary benefit for the home owner.
- "Sponsored" Short Sale: This is when your lender approaches you to short sell the house. The opportunity for a sponsored short sale offer expires in a short period of time. The lender typically pays an incentive for the home owner to cooperate in the short sale process. A sponsored short sale typically proceeds faster than a "Regular" short sale.
We are starting to see more Sponsored Short Sales in our areas. They generally occur with the larger lenders (Chase, Wells Fargo, Bank of America) who were part of a multi-billion dollar settlement relative to their mortgage lending practices. We have not yet seen Sponsored Short Sales offered by smaller lenders, but like everything with short sales, this could change.