Short Sales are the latest "hot" category for Charlotte Real Estate home buyers. A Charlotte Short Sale is when the home is worth less than is owed on the home. That is not difficult with the recent lending practices that were dictated by our favorite uncle (Uncle Sam). Many people have purchased Charlotte homes with no money down and have only lived in the home less than 5 years. There will be minimal equity accumulated in five years (the vast majority of the payment has went to interest which was also a tax reduction so the owners did receive a financial benefit to owning the home).
Now add on the fact that the owner has stopped paying on the owed debt on their Charlotte Real Estate. Regardless of the personal situation (there is always a reason), ultimately the owner is several months behind and legal proceedings have begun. The bank is now owed thousands more than the original loan value and the current market value. The bank must determine how much more they can possibly afford to lose (or gain) by going into foreclosure. The bank's job is to preserve assets and not donate homes to buyers. They must determine their short term loss compared to the foreclosure loss. This is done via a market analysis of recent foreclosed homes sold in the area. The mortgage holder then compares the cost of damages likely to be experienced by the angry owner. This is determined by their recent experience.
There is also the 2nd mortgage to consider. The first mortgage holder will receive the majority of the funds in foreclosure (most are 80/20 mortgages). The 2nd mortgage loses everything almost every time (this is why no one is foolish enough to throw away their money in 2nd mortgage investments); too high of risk. It is a fool's bet.
Ultimately the short sale is a losing decision for the bank in order to "cut their losses". Most of the loans are guaranteed by Fannie and Freddie to these entities also need to be in on the decision.
Short sales are complicated and can be a good deal for the buyer. You must be patient and have an agent that is familiar with the process and dedicated to getting it approved. It takes countless hours and phone calls to make this work. Bankruptcy also further muddies the water and adds another complication.
I would personally recommend purchasing a resale home. The market values are held down by the foreclosures and you are actually purchasing a home in great shape. You avoid the unknowns and are still buying at a discount. Each market is different but this is often a more intelligent way to find a home. Yes I am very familiar with the process and willing to help you get through.