Short sales are sometimes an option when an owner owes more on a property than they can recoup through a sale. They happen most often when there's been a drop in the real estate market.
They seem like a good deal. Then again, looks can be deceiving. This is what you need to consider before you jump at what seems like a fantastic offer through a short sale.
1. You probably aren't really getting a bargain.
Sure, the owner is selling the house for far less than they paid for it -- but not for less than it's worth. The problem is that the owner's mortgage is outrageously high because the house was overvalued in the past. Now, the price you are getting is -- at most -- fair.
2. You have to purchase the home "as is."
If you buy a short sale home, you can forget about asking for changes or improvements after the home inspection. Typically, the homeowner isn't in a position to do any repairs. The mortgage holder is controlling the deal, so you have to be prepared to make any necessary repairs yourself.
3. You may be waiting for some time on the deal.
You can also forget about closing on a house in a hurry. Since the mortgage holder is in charge, that's where your offer has to go. Therefore, you can expect to wait several weeks (or longer) for a response. The closing process can also take a fairly long time. This can be extremely inconvenient -- and expensive -- if you're trying to buy a new property at the same time you're selling an old one. You may have to find temporary housing at some point, which means moving twice in a short time.
Some short sales are a real bargain, especially if you're looking for a home in an area that has a lot of competition. You can often find a prime piece of real estate at a fair price without having a bidding war. Just make sure that you go into the process with your eyes wide open. Take any agreement you plan to make to a Pennsylvania real estate attorney for review before you commit to any terms.