Disclaimer 1: I don't market homes that are in a short sale position. Why not? I don't have the expertise and feel strongly that anyone who works with sellers in this situation should know what the heck they are doing!
Disclaimer 2: I haven't had a buyer make an offer on a short sale. Why not? All of the home buyers I've worked with this year have had time frames that needed to be met to be in to their new homes.
After reading much about short sales, and listening to real experiences being told by the agents who are working with these sales I have learned enough to know the following and pass along the S.S.S. to you:
A home owner puts his home on the market for less than what they owe on their mortgage (or 2 mortgages, or 3 mortgages.)
The sellers real estate agent and the seller then put together a package for the lender (and 2nd lender, and third lender if applicable) to explain the hardship that the seller is facing, the falling property values in the area and the seller also sends along all of their financial information. (Think of this as the documentation for applying for a mortgage, but with reverse intentions)
A home buyer hears about the house for sale that is priced attractively and makes an appointment with his buyers agent to view the home. Home buyer then decides to make an offer on the home. Seller accepts the offer and the purchase agreement is forwarded over to the lender (and 2nd lender, and 3rd lender, if applicable)
Home buyer and the buyers agent wait. The first week goes by and everyone is still patient because of course they've been told to expect this wait. The 2nd week goes by and still everyone is displaying patience. On to week 3 and the buyers agent has been calling the sellers agent asking if there is any news, and has the package(s) that has been submitted to the lender(s) been reviewed? The sellers agent states "Have patience". Week 4 comes around and perhaps the package has been reviewed by someone with authority to do so at the first lender. (I'll stop mentioning lender #2 and #3. You get the idea by now.)
Weeks 5-8 the lender orders a BPO. (Brokers price opinion, meaning that the lender, normally in another state, wants to make darn sure that the house is really worth what the seller, the sellers agent, the buyer and the buyers agent in this local area feel it is worth.)
The lender(s) decides one of two things: That the house is worth what the purchase offer indicates, or that the house is worth more than what is being offered for the home.
Guess what happens if they decide it is worth more? Google "short sales" and you'll have so much to read that your eyes will hurt.
Did I forget to mention the fact that some of these transactions don't allow seller paid concessions to the buyer? Did I also forget to mention that while the buyer is waiting for a response that the interest rate they were quoted upon mortgage application has probably now expired?
Purchasing a short sale can be a good thing for the patient buyer and the seller. Always ask upfront what the expected time table is, and be aware of the challenges and changes that can take place during the process.
Go in to the process with your eyes wide open. Ask your agent for their experience with them, and seriously consider a long sit-down with your agent to discuss your purchase options in this ever changing real estate market.