As ShortSale and Foreclosure certification holders, Jill and I will sometimes come across friends who'll ask that we keep an eye out for promising short sales. When we ask why, they tell us how short sales are great deals selling under market value. I think this is interesting and is a perception shared by many out there due to all the misinformation around today.
Many people confuse short sales with REOs -which one can sometimes find good deals if the home is in need of TLC and the buyer doesn't mind investing some of their own money to fix it up. A Short Sale though is basically a program for sellers to settle a debt on their properties before going to foreclosure. It mainly benefit that seller - not the next buyer.
There are a few steps to a short sale that people need to know about before entering into the transaction. First, the process doesn't end after the first agreed upon price. This is because the bank, or investor the bank represents, are the ones taking the loss - so they will be the ones deciding the final amount. Ideally, the bank will want the home sold for TODAY'S MARKET VALUE so big deals will be unlikely unless the home sits for a long time. By that time the home will most likely be foreclosed upon anyway. Short sales become more of a hassle with every extra liens on the home since those will have to be taken care of as well, most likely out of pocket of the new buyer before the home will be allowed to close.
Overall, short sales work well for those trying to get out of bad situations but don't assume they will be easy, or a great deal. If you want a really great deal, be diligent in your home search and be ready to act as soon as you see your dream home no matter what type of listing it is.(short sale, foreclosure, standard sale) The early bird does get the worm :)
