If you are planning on buying a short sale, you might want to re-think that plan. According to an article in Reuters, real estate agents across the country are calling the short sale system broken. Lenders have unreal expectations of property values, and even if their values are in line with the market, they are often so overloaded with properties that dealing with them becomes impossible. From personal experience I’m going to have to agree with their assessment.
On the surface short sales appear to be a win-win-win strategy for the seller, buyer and the bank, yet trying to complete one tends to be a losing proposition. Until lenders change how they manage their short sale process investors are probably better off spending their time and efforts elsewhere. Don’t get me wrong, money can be made in short sales, but the time and energy taken to complete these deals can be better used on other investment opportunities which are just as good, if not better.
I have personally gone through the short sale process in order to buy one of my investment homes, and I can say it was the most stressful deal I’ve ever been a part of. Dealing with the lender was a complete nightmare, and the deal nearly fell through at the last minute. I would say that the time and effort I put into this one investment deal was at least double the time and effort required for a typical deal, and the profit was basically the same. I tried it once, and I’m not going back--I recommend you do the same. Unless you have some relationship with a lender that gives you an advantage over the average Joe, buying a short sale just isn’t worth the effort.