As a buyer in the marketplace looking for a great opportunity, a short sale may unlock a great deal for you. However, there are some things to consider:
If you think you are going to steal a house at a huge discount off of retail price, then you’re looking in the wrong place. Lenders are fairly sophisticated with valuation and usually have a very good idea of what a property is worth. The lender will attempt to get as close to retail price as is possible. However, it may be possible to get a small discount of what the property would otherwise sell for if it was not a short sale because many home buyers cannot or will not make offers on short sales. Short sales can take a long time to get approved and may result in “taking a buyer on a frustrating rollercoaster ride” so many buyers just pass when then see a short sale and therefore short sales generally are not well positioned to command “top dollar” in a market
But to get that great deal, you have to be patient. Most short sales will take about 60 days – some faster, some slower – and we won’t know how long, until its over. So, if you can be patient (i.e. don’t “have to be in the house before school starts”, or “before Christmas,” or by some other deadline) and can endure the short sale process, then your patience may be rewarded with a great deal!
Your seller’s lender does NOT care about your rate lock, your plans for Christmas, or the fact that you sold your house last week and all your stuff is in a truck parked in the driveway and that you have cash and that you have planned your sisters wedding for the back yard next month. They don’t care – so save yourself the aggravation: don’t try to buy a short sale unless you can be patient.
You should also have some flexibility on price. Just because you and the seller came to agreement and have a signed a contract does not mean you will get the house for the agreed to price – it must be approved by the seller’s lender.