Short Sales, info for the Buyer

There is a lot of talk these days about short sales.  My first words of advice; if something looks too good to be true, it usually is.  Short sales have snags all over them.  If you are considering putting an offer in here are a few things to find out first.

Does the seller have one loan or two on the home?  If the seller has 2 loans the likely hood of getting approval from both banks is slim.

Is the seller in a hardship? With out seller hardship the bank will not easily approve a short sale.  Hardship could be death, divorce, health issues, and loss of job.

Does the loan have PMI? If it does, just forget about a short sale, the loan is insured and there is no reason for them to take less money.

Is the seller late; or rather how late is the seller on their mortgage?  Has the foreclosure process begun?  If the seller is on time with their loan payments, what incentive does the bank have for accepting a short sale? 

Are the sellers investors? Or was the property a primary residence?  The banks are more forgiving to personal residences than investors.

Does the seller have a big 401k or other investments?  If so the bank may want it to pay off the difference rather than being shorted, and our short sale addendum allows for the seller step out of the contract.

Each of these items could mean no contract for the buyer, so it is important to know as much as you can, before you take up months waiting to hear if your offer has been accepted.Be sure to read these other post as well:
Mortgage Forgiveness Debt Relief Act of 2007
Short Sales – What Sellers should know
Short Sales – “If something looks to good to be true it usually is”