In short, short sales are a good idea if you have plenty of time and money. A short sale buyer may get the property at a reduced price, but the property (in all likelihood) has its share of problems — think “fixer-upper” — and the deal needs to go through considerable red tape to make it happen.

How much should you offer for a short sale?

This is something that the buyer should discuss with their real estate agent. It’s best to strike a balance between what’s a good deal for you and what’s reasonable for the lender. A price that’s 5% to 10% below market value is typically a good number to put on the table.

What makes a short sale of a house?

For example, if you owe the bank $200,000 but sell the home for $180,000 (and can’t pay the $20,000 still owed), the sale would be considered a short sale, as the mortgage lender would be receiving less money than it is owed. You can only do a short sale if the bank approves the transaction.

How long does it take for a short sale to close?

A short sale home closing process takes an indefinite amount of time. The seller’s lender calls the shots, not the buyer nor the buyer’s lender. If you are trying to close escrow concurrently with the sale of your home, it might not happen.

Can a bank accept a short sale on a home?

A lender will only accept a short sale if you can show both an inability to repay the loan and that the proceeds from a sale of the home could not fully repay the amount the owed. Once the bank approves a short sale — and you and the bank sign papers to this effect — the home goes on the market.

Is it better to buy a house in default or short sale?

Although a slim margin of short sales may be profitable for a buyer — because there are always exceptions — much of the time, a buyer would be better off buying a home that is not in default. Short sales are not sold at discounts.