I get asked this question all the time from new clients- this is my basic advice I give them:
Some of the listings you'll find will be "Short Sales." Basically a Short Sale is when a homeowner owes more then what their property will sell for. The homeowner will try to sell the property "short" of what they owe. When the homeowner receives an offer, they then submit it to their lender in hopes that the bank will "forgive" part of the debt that they owe.
Often times, agents will list properties at ridiculously low prices in order to attract any kind of offer. They typically can't submit anything to the homeowner's lender regarding relieving the debt unless they have an offer first. However, the odds are against you..only 1 in 24 Short Sale offers are accepted in California.
Short Sale transactions are VERY difficult and not for the timid or impatient buyer!! Part of the frustration, is that it may take months to get a response back from a lender for a short sale offer, and not necessarily the answer you want. I've been waiting over 3 months on two short sale offers I have submitted to lenders. I have also had situations where while waiting for a response to the short sale, the property went into foreclosure and sold to someone else, without us even knowing.
So if you like a listing that is a Short Sale, keep in mind that it is not necessarily listed at a price that will be accepted. For out of area buyers, I caution them not to fall in love with a short sale. Its fine to try to submit an offer on one, but don't get your heart set on getting that property because there is a very slim chance that you will. I recommend that these buyers have back up properties as well to consider! If you're visiting Palm Springs for the purpose of buying a property, try to consider multiple properties in the event that your first choice doesn't come together, especially if it is a short sale!
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