What are the pros and cons of shopping for a short sale. Can you get a "great deal"? How long will it take?
The first thing to consider is your time frame. If you're selling your home and moving in to your next purchase a short sale probably isn't the way to go. The only exception would be if you have someplace else to stay while waiting for settlement on your short sale purchase. In that situation you could try to negotiate a post settlement occupancy but that could lessen your chances of securing a buyer. Of course there is also the possibility that you could be three or four months into the transaction and suddenly find out the bank has denied the sale and you have to start over again. All things to take into account.
The second issue is financing. Although loan rates are pretty stable you can't lock your rate until you're within a certain number of days until settlement so your rate floats while you're waiting to hear from the bank. Of course if things stay the way they are you should be fairly safe in this area. Now, what are the chances things will stay the way they are? We all know what they say about the definition of "assume".
A question I often hear...Can I get a great deal? That depends. A while back I wrote an offer on a short sale for a buyer client that needed quite a bit of work. (The house, not the client) We looked at comparable sales and an estimate of work needed and made an appropriate offer. We ended up competing. The buyer who won paid almost what a house in good condition had sold for. On the other hand I found another home for a different client that needed substantial work and was priced accordingly. We made the offer at list based on comparable sales and when all the work was completed after settlement the buyer had a total of about 180K in the house and the comparable sales were in the 205K range. It's really a case by case issue.
Then there's bank approval to deal with. I've had that happen in as little as 60 days but that's unusual. Is there a normal time? I've heard from 60 days to 12 months in extreme cases. When writing an offer for a client on a short sale I usually advise a minimum of 120 days for approval from the bank. That can be extended if need be by the parties to the contract. The important thing to remember is that you need to understand the process up front so, when things seem like they will never come to a close you don't give up and walk away just before the bank says yes. One more word on bank approval. It can also depend on how many loans there are. The easiest scenario is when there is only one loan. Add a second or possibly third and things can get really complicated.
I think I would be remiss if I didn't add that the agents involved need to know what they're doing. If not the whole transaction can fall apart because the agent missed a deadline they were given by the bank. If the bank says they need such and such information by close of business Friday or they will close the file they aren't kidding.
Bottom line, a short sale can be a rewarding experience but go in with eyes wide open or rewarding is not the adjective you'll be using at the end of the day.