What You Need to Know about Buying a Short Sale
If you are considering buying a home that is a short sale, there are some things you should be aware of. First of all a short sale is when a seller owes more money to the bank than they will get from the sale of their home. In this case, you actually negotiate the price and conditions with the present owner, since they still own the home. Then the contract has to go to the bank for approval. There are no guarantess that they will agree. Before that can happen a whole package of information has to be at the bank including 2 or 3 estimates of value of the home, all of the financial information about the seller and more. If the whole package is not there, more than likely the file will go to the bottom of the pile. A seller should have an atty. dealing with the bank or a loss mitigation specialist.
Even if everything is there, it can take a very long time to get an answer. Until the bank has given the okay I personally would not put out any money to do inspections and I would give myself an out in the offer in case you get tired of waiting around for an answer.
If you have the time to wait that is fine, but if you don't, there are no guarantees that the deal will ever be finalized. The worst one I heard was from someone in my office, who had a contract that took a year to close.