Short sales are complicated, but can help homeowners who owe more than property is worth

One hang-up may revolve around the appraisal. The appraised value needs to be commensurate with what the buyer offers to pay, Gormley said. But sometimes a lender uses a “broker price opinion” (BPO) — which may be a “desk appraisal” by a real estate agent who hasn’t visited the property. The resulting “market value” defined could be way out of kilter with the current economic climate or the condition of the property.

Rodriguez said she was recently issued one BPO based on property values two years ago. “They’re not consistent in placing value,” she said.

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Short sales in the Washington area.

Moreover, the sellers have to worry about the buyer potentially getting cold feet or being drawn away by a better offer, forcing them to restart the process.

Depew, the prospective buyer, was not required to put up any earnest money and had a clause inserted in his contract stating that after 45 days, he needed to give only three days’ notice to walk away without penalty.

“Don’t put forth any of your own money until all time limits have been met,” said Depew, who suggests that buyers continue to look at other properties while waiting. “Bail if something else comes along.”

So why shouldn’t you save the headaches and go the foreclosure route instead?

The applause for short sales over foreclosures comes from three groups: Your neighbors favor short sales because they seem to have a less negative impact on the community. Lenders are glad someone else has to maintain and sell the property. And sellers’ credit ratings take less of a hit.

If the deficiency is waived, the credit report will say something like, “loan paid off for less than owed.” It’s still a hit, but not as bad as a foreclosure.

Short sales are one of those “heartbreak things” for the seller, said Wharton, the Long and Foster agent, but for a buyer, “if you can put up with the [stress], sometimes you can get a very good deal.”

On Aug. 7, the Damianis learned that their short-sale journey was finally over. The sale and Depew’s VA loan were approved, the inspection is done and settlement is scheduled for early September.

Depew is delighted. “So the patience and perseverance paid off in the end after all,” he said. “Absolutely perfect and I couldn’t ask for a better home.”

Ann Cameron Siegal is a freelance writer.

Help is available

Here are some of programs attempting to make the short sale process more efficient, transparent and attractive:

●Home Affordable Foreclosures Alternative (HAFA): Established under the federal Making Home Affordable program, HAFA is a government-sponsored alternative to foreclosures. HAFA is directed to provide a standard process flow, minimum performance timeframes and standard documentation. The servicer of the loan also forfeits the ability to pursue a deficiency judgment against the borrower. Specific cash benefits, at taxpayer expense, are provided to sellers, lenders and junior lien holders to help get short sales off the books.

Many small regional banks and credit unions, however, do not participate in HAFA. (For more info, to go to: http://www.makinghomeaffordable.gov/programs/exit-gracefully/Pages/hafa.aspx.)

●Bank of America Preapproved Price Short Sales: Through this program, Bank of America will work with the seller and the seller’s agent to establish a preapproved list price before the property goes on the market. If the sale is successful, the seller may be released from any deficiency and may receive relocation assistance. (For more information, to go: http://homeloanhelp.bankofamerica.com/en/home-affordable-foreclosure-alternatives.html.)

●Fast Help For Homeowners (FHFH) Act, HR 6153: This measure, recently introduced in Congress by Rep. Jerry McNerney (D-Calif.), would require secondary lien holders to respond to short sale requests within 45 days or else approval is automatic.