Believe it or not, I have heard that quite a few times. Buyers are looking for a house and come across this great “deal” on a house listed as a Short Sale. Wow, it’s 20% less than any other house in the area. So, they put in an offer. It is signed by the Seller and we now have a binding contract. There is just one important step to consider. The Seller’s lender is accepting less than what is owed (Short Sale) and must approve the sale. Everyone waits months and months, only to find out that the Seller’s lender will not approve the sale at the contract price.

What happened? In most cases, the asking price was too low in comparison to other sales in the neighborhood. Many have the misconception that short sales are supposed to be better priced than conventional sales. The only reason short sales may seem cheaper is if they are in poor condition. Otherwise, all houses will sell at market value regardless if they are short sales, foreclosures, or regular conventional sales.

So, why was the home listed at such a low asking price? The answers are many.

· The Seller wanted the agent to list it low so that it would go under contract quickly and they wouldn’t be bothered with a lot of showings.

· The Sellers wanted a contract on the house to try and slow down foreclosure proceedings. That is actually a fallacy since one has nothing to do with the other and foreclosure proceedings will still continue.

· The agent wanted to get a better idea on what the banks would really accept.

· The banks valuation is wrong.

There are many more reasons but those are just a few. If you are purchasing a short sale, make sure you do your homework. Look at other comparable sales in the neighborhood. If the asking price on a short sale appears too good to be true, it probably is. If after doing your research, the house appears to be comparably priced, go ahead and make your offer. Yes, you can probably go a little lower than other comparable sales but not anywhere near 20%. Will your offer be accepted by the Seller’s lender? Who knows? There are still so many considerations, not the least of which is the Seller even eligible for a short sale (do they have a hardship, do they have other assets, etc.). The Short Sale process is difficult and not for the faint of heart. Don’t make it even harder by entering into a contract with a purchase price so low that the banks will never accept it.