A short sale is an agreement by the bank or lender that they will take less for a property than what is owed on the mortgage.
What does that mean? When someone is forced to move or relocate due to a job
transfer, for instance, and it is during a “down market” this can help them get on their way to their new location. More often, it is a “pre-foreclosure” move to help save a seller’s credit (it is a bit better than a foreclosure or
bankruptcy on your record but it still has it’s consequences).
The upside...you can often get a great deal on a home or property because it is often listed at “realistic” or slightly below market value.
The downside...the property is usually in “as is” condition and inspections are often out of the buyer’s pocket. And even though it is listed at a low price, it doesn’t mean the bank will accept that price. Afterall, the bank is in the business of making money and doesn’t want to lose anymore on this property than it has to. Another concern is that if your offer DOES get
accepted (which takes about 2 weeks) you are not guaranteed you get the property until it closes (average is 90+ days to close, rather than 30-45 for a non-short sale). You could be pending in escrow and the bank could get a better offer the day before you close, then they can bump you from the first position and sell it to the other folks.
SO, in some cases you are better off negotiating a good price with your Realtor on the home of your dreams rather than the select homes in short sale, foreclosure or bankruptcy. Don’t miss this booming buyers’ market.