Short sales, where lenders agree to take less than the amount due to them, have tended to sell for less than similar homes. One reason is that short-sale listings usually don’t look as good as the competition. Another reason is that short sales require lender approval.
Last year, lenders often took three to six months to respond to a short-sale offer. If the response was no, the buyer was out looking for another home after having wasted a lot of time. Many buyers who expected short sales to be good deals shied away from them altogether after having a few bad experiences.
Subsequently, the Obama administration put pressure on lenders to do more short sales and fewer foreclosures. Now a process that was laborious is much easier to navigate.