Short sales are a great deal when they are approved.
A short sale means that the bank has given permission to the owner to sell his/her property for less than what is owed. To see a thorough explanation of how short sales work and how to do one follow this link.
The problem is it takes several months for the bank to grant this permission, in the meantime you have to wait and there are no guarantees that the bank will approve the sale.
Buyers think logically, it benefits the bank to sell on a short sale since they get money now as opposed to waiting several months and spending money by going through a foreclosure.
However, banks are profit only motivated, when an Industry (such as banking) or any other company, corporation or individual is profit only motivated, he/she will act irrationally and it would not make sense to you or me.
In the case of short sales this happens all the time. Banks have scoured every single accounting trick they can come up with and have devised ways of getting the money from the FDIC (Federal Deposit Insurance Corporation) or the government, the only reason they will do a short sale is if they can get THE FULL AMOUNT of the underlying loan from the FDIC or the government, they are NOT interested in helping the Buyer, much less the defaulting homeowner.
This is a very good YouTube video which very succinctly explains how this process works, watch it, you’ll be amazed & possibly shocked.
A short sale is always beyond the control of the Buyer! Nor the Buyer, nor the Realtor (Buyer’s Agent) has ANY degree of control in this process.
Many times you read or hear claims from Realtors that they “negotiate” with banks to get short sales approved. Nothing can be further from the truth. Banks have guidelines and procedures, the Realtor may get some of the bank’s terms to benefit you (for example, in one instance we persuaded the bank on a short sale not to pursue our client for a deficiency judgment), however his/her control of the transaction is minimal, he/she is subject to following the bank’s instructions.
Having said that, if you have the patience to wait for up to six months, and in some cases a little more, you can get a great deal on a short sale.
The other advantage of a short sale, is that they tend to be in a much better condition than distressed properties since their owners are taking responsibility for their situation, hence it is easier to get a loan.
Whether you submit an offer for a short sale or a foreclosed home this is what you need to know to get your offer accepted by the bank.