Is it Worth Your Time to Buy a Short Sale?

I recently saw an interesting article by Tim Manni on HSH.com, advising buyers on the short sale process.  Given all the potential headaches of short sales, buyers often ask if they should be looking into short sale properties or if they should steer clear altogether.  According to the article, buyers should align themselves with “a pro who is familiar with short sales.”  That makes sense…but then the article delivers the buyer’s wake-up call…

Adjust your expectations: Don’t get your heart set on a specific property. Odds are you won’t get it. You’ll probably make several offers, and after that, it may take months to close once you have an accepted offer.

Unfortunately, he’s probably right.  Most short sales negotiated by real estate agents, whether or not they are “familiar with short sales” will not close.  Why is this? Well, first, some buyers are not really cut out for the waiting that may be involved in a short sale.  Of course, in most states, it is quite easy for buyers to get out of a short sale deal.   Knowing this, many buyers will make offers haphazardly, understanding that if a better deal comes along, they can just walk away from their offer.

So what does this mean for sellers and Realtors?  Well, in reality, it means that the buyer is very likely to walk on the deal.  And in some cases, multiple buyers may come and go.  In the meantime, the property (if in default), is moving closer and closer to foreclosure.  So why deal with flaky retail buyers at all?  Because real estate agents know that they need an offer, any offer, to get the ball rolling with the bank.  According to another article on HSH.com by Gina Pogol:

Most banks will not agree to a short sale in writing until the seller undergoes a lengthy application process and there is at least one formal offer on the table . A property may be listed as a short sale even before the lender has actually agreed to accept a lower payoff.

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