Real estate agents are complaining that some homes marketed as short-sale properties are not actually short sales and they affect both the market and buyers’ expectations in them which is helping to create a muddied picture when it comes to real estate investment.

As a real estate investor who has been involved in almost every aspect of the market I understand the picture a little better. Let’s examine some of the facts here: In a short sale, the lender signs off on a real estate transaction in which the sale proceeds fall short of what the owner owes for the mortgage.

A decline in the home's value since the date of purchase, or a seller falling behind on mortgage payments do not automatically qualify a home as a short sale. Nor can there be a short sale without the lender's approval, as the lender must consider whether it is worthwhile to accept less than the full loan amount in order to avoid a foreclosure and save their home and credit history.

So why would a property be marketed as a short sale when it clearly isn't a short sale? Well, serious buyers are a rare breed in some market areas these days, and many of them are looking for bargains. Short sales can in some cases sell for a lower amount than comparable properties that are not similarly distressed, as there is urgency by sellers to get out from under the properties and by lenders that wish to avoid costs associated with foreclosure.

In all these cases a foreclosure would actually produce a better lasting value and release a property back into the market which would have an above average chance of actually not coming back in as another foreclosure statistic just a few months down the line.

This is exactly why foreclosures are a such a powerful vehicle for real estate investors and why they make sense in the financial model we implement in our real estate economy. They are designed to generate a value-laden solution that revitalizes a stagnant property and allows it to work in the microcosm surrounding it adding value to both the economy and it immediate community.

Fake short sales achieve none of this. They are used to merely attract buyer attention and move properties off Real Estate agents’ property stock in the full knowledge that as financing deals fail later on that property will, in most likelihoods, come back to be either sold as a fake short again or, this time actually go to foreclosure.

In the past decade the real estate industry has suffered from predatory lending practices which have done little to enhance our economy and have deprived many people from attaining the great American Dream.

The time has come to set the record straight and look to our lawmakers for some legislation which will stop predatory lending and selling practices in real estate.

Author's Bio: 

David Lindahl, also known as the "Apartment King" has been successfully investing in single-family homes and apartments for the last 14 years and currently owns over 7,000 units around the US. David regularly shares his secrets and experience on the same stage as Tony Robbins, Robert Kiyosaki, and Donald Trump! For two FREE copies of his highly recognized newsletter Real Estate Insights, please go to