A short sale is when the seller is short money. A short sale is a transaction in which Seller's proceeds are less than the amount necessary to pay off liens secured by the property. A few examples: mortgage(s), home equity lines of credit, tax claims, homeowners' association/condominium fees, and legal judgments.
A short sale does not necessarily mean that the property is going to foreclosure or that the Seller is in financial difficulty.
Is the seller obligated to disclose to a potential buyer that they will be short? The question is asked on The Pennsylvania Association of REALTORS Seller's Property Disclosure Statement: “Are you aware of any judgment, encumbrance, lien, overdue payment on a support obligation, or other debt against this property of Seller that cannot be satisfied by the proceeds of this sale?”
Does the buyer have the right to know this prior to making an offer? Would you want to know before you made an offer on a property? I would.
2 weeks ago I attended a closing that was a short sale. The offer was accepted in September. Yes, 5 months earlier. A short sale can take many months to close. Buyer should be well informed...