For those of you just joining us, this is the second post in a multi-post series on whether it's worth it to buy a short sale. You can read the first post in series on short sales here, where I wrote about the importance of considering how much time you have to wait, as short sales can take anywhere from 3-6 months, or more to close. As I also mentioned briefly in the first post, the main reason buyers look into these types of sales is because they can get a great deal on them, which brings us to the next main point to consider.
How Much Under Market Value are You Purchasing the Property for?
The main reason to put yourself through the hassle of waiting so long for a short sale to close, and not knowing for a long time whether the seller’s creditor will even approve the sale at your contract price, is the fact that theoretically, you should be able to buy the home at a price that’s under market value. A savvy buyer who has a flexible home buying timetable understands that in effect, the discount they receive on the property is their "compensation" for going to all this trouble to purchase the property. At the end of it all, this is the goal.
They key is, how much of a discount are you getting on the short sale? It’s important to have a great real estate agent who will analyze comparable sales in detail and provide you with an accurate estimate of how much the property is actually worth. If the market value is not much more than the sales price of the short sale, you might be fighting a losing battle, because remember – ultimately the sale depends on whether or not the seller’s lender approves it at the agreed upon price.