The National Association of REALTORS (NAR) recently published an article about short sales and how they can so easily fall apart. The full article can be read here. http://realtormag.realtor.org/daily-news/2012/10/31/why-short-sales-can-still-so-easily-fall-apart
Contrary to it's name, short sales do not equate to "short" as it relates to time. They are called "short sales" because the current value of the property is not enough to cover the cost of the outstanding mortgage(s), expenses, etc. associated with selling the property in the current market.
The problem with the short sale market is that in a majority of the cases yet today, 5 years after the bubble burst, the banks are not cooperating at a level that they would like the public to believe they are. Either it is in large part due to the investors not willing or unable to recognize that the values have adjusted that much lower. Or that they are prepared to make a claim against the mortgage insurance, unless you put 20% cash down, there is mortgage insurance. But the mortgage insurance companies are out of money to pay claims...and it makes it difficult if not impossible for the investors to recoup their losses.
This creates a conundrum in that the seller, under the advice and counsel of their agent race to get an offer accepted by lowering the price of the property in order to attract a buyer get an offer. But then what?? In far too many cases, buyers so badly want the property at the low price that they are not being fully informed of the timeframes that are likely to be experienced to get to a closing...if ever.
It has been my experience that in the majority of cases, the buyers are so excited to think that they are going to get a property for a below market price that they agree to allow the bank time to respond to the dollar amount, but after a while grow impatient with the lack of response and eventually initiate a cancellation of the purchase agreement or refuse to extend the date by which the bank has to issue 3rd party approval. Time after time, I see sellers attempting to sell via a short sale and time after time eventually see the property end up being foreclosed upon or Real Estate Owned (REO). By their own numbers, banks realize a higher return by accepting a short sale offer vs. a foreclosure offer, but yet the situation is not getting any better.
If you as a buyer are in a position to wait for 6-12 months for property to obtain 3rd party approval to sell short, and are accepting of those timeframes all the while losing out on other opportunities to move on with your life, then short sales may be for you. But if the prospect of having to wait that long, or never closing do not work with your life plans, then perhaps you should consider other properties.
The best way to determine the best route for you is to sit down with a professional REALTOR and have a candid, honest conversation as to what your needs are and then prepare a plan accordingly to make your goals become reality.
