Buying a Short-Sale Property
The process of buying a short sale is basically the same as buying a traditional sale home except the proceeds of the home will be going to the lender instead of the seller; although the seller still owns the home. Due to this, you are still buying from the seller but the bank is now involved. The bank must approve the selling price as well as any offers made on the home. Bank involvement, of course, will make the process more complex but the basics are generally the same as a traditional sale.
Advantages to Purchasing a Short-Sale Property
The main advantage to buying a short-sale property is the potential to get a home for below its fair market value. This may provide some first time home buyers with the opportunity to get into a home they would otherwise be unable to afford.
The other large advantage to buying a short-sale property is that the sellers are still living in the home; making it far less likely that the home will be damaged as they can sometimes be in foreclosures. However, they may be short on cash and not maintaining the home to the highest level but they are unlikely to do anything to knowingly damage the home.
Disadvantages to Purchasing a Short-Sale Property
There are, however, many disadvantages to buying a short-sale. Probably the largest downfall to short-sales is the waiting period. Banks are notorious for taking months to respond to offers on these homes.
Along with this, it is more difficult to get a good deal on a short-sale than foreclosures. The banks are still interested in trying to get fair market value on the home and will price it accordingly. Although they do wish to sell the property, they do not have the sense of urgency as in a foreclosure; they may be willing to wait to get a better price on the home. This is the case because the bank still does not own the property but would be the party taking a loss if the home sells for less than what it