Short sales are properties where the home owner owes more on the loan (or loans) than the current market value of the home.
In most cases it takes between four and six months. Short sales can be difficult. The lender is trying to get as much money as possible as they don't want to lose much on the property - who would!
Why should I buy a short sale property if it takes so long, it sounds like a big hassle? There are actually some good reasons! The main reason is that short sales can be really great deals! The other is that if you have found the property you want, you may not want it to go to auction. If the property goes to auction then the property will sit vacant for awhile and vacant properties generally decline in value as they aren't being maintained. The lawn will probably further degrade, depending on the time of year, and so forth.
The price you see listed in the MLS is the starting price for the bidding process. Sometimes a lender might not budge much from that price and at other times the lender may give in a good amount.
Every short sale is different as there are many factors which can arise. For example, the owner may have been in default for some time. There might be many liens on the property - tax liens, mechanic's liens and so forth. There may be property damage and other encumbrances.
Before making an offer on a property, make sure you review the situation carefully with your realtor and other advisors as necessary. Your CPA and attorney may be good to consult with.
Generally you want to have the best title insurance -for you- that you can get. Why you ask? If a property owner is having difficult making payments on the home, other liens may be placed against the property. If that happens after you take possession then a great title insurance policy can be quite helpful. Your title company can answer questions in more detail.
When making an offer on a short sale, remember that you are generally competing with other potential buyers. The lender isn't going to want to have many contingencies to deal with. For example, if you make your offer contingent on selling your current home then you may have just taken yourself out of the running.
Make sure you have the time necessary to buy a short sale property. If your lease expires in three months, for example, and you can't change to a month-to-month lease then try to come up with a better solution before attempting to buy a short sale property.
We can't possibly cover everything so do your homework and remember - if buying a short sale can save you from working many long hours then it really can be worth it!