Should You Buy a Short Sale?

If you're asking yourself what is a short sale, read further.

A short sale is property in which the amount owned on the home exceeds the value of the home.  With real estate prices dropping over twenty percent in some places last year, it's easy to see why homeowners who bought in the last couple years (even those who bought with 20% downpayment) are underwater.  The reality is, many homes especially in the newer neighborhoods are underwater. 

That said, the statistics for short sales that close is 30 percent.  That means on average, if you submit an offer and have mutual acceptance, spend all the time and energy on putting an offer on a property, after 60-90 days the short sale is likely to fall through and force you to go back to the drawing board.

In general, you should stay away from short sales unless you're prepared for what comes along with it - wasted time and a lot more work.

If you have an agent that has experience in this area, they can do research and some detective work to see if the short sale is even worth pursuing.  A couple items they'd look for: has the short sale been approved?  If not, where are they along the process?  How many lien holders are there (you need to know this because all lien holders need to sign off)? 

I hope you found this article useful.  Good luck on your home purchase!

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