Short Sales - Buyer Edition

Many investors are thinking there may be some good buys in short sales...there are...but there are also some important hurdles to be aware of:

1) Just because a Realtor has listed a property and advertised it as a short sale, does not mean it really is...
a) Has the Seller completed a short sale package and received tentative approval from the lender?
b) Is there a second or HELOC and have they been contacted and given approval?
c) Are there any other liens that could encumber the transaction?

2) Are you willing to jump through hoops and wait for up to 180 days?
a) Banks are currently swamped with requests and can take up to 30 days to respond.
b) You may plan to use financing, but the rate/terms you banked on may change radically during the negotiations. I recommend at least 60-day locks.
c) They may drag their feet for 20, 30, 60 days...then say no.

How do you package an offer that banks will accept:
1) Hire a Realtor familiar with short sales.
2) Have him/her prepare your own BPO to support your offer price.
3) If possible offer cash.
4) Limit contingency to the bare minimum to protect you.
5) Submit all documentation together, complete and legible.

Short sales can offer good value, but for the average person looking to buy a Principal residence I would say they are not your best option. Leave them to Investors.