Buying a Short Sale Home Requires Patience

If you are planning to buy a short sale home in order to get a good deal, you need to have two things in abundance -- patience and understanding.

You need to understand how the buying process works with short sale homes, because it's different than buying through a regular transaction. And you need to pack your patience, because the process of buying a short sale can be a long one. The process also varies from one state to another, and even from one home to another. So you don't always know what to expect.

What Is a Short Sale?

In simple terms, a short sale is a technique used to avoid home foreclosure. The homeowner's lender agrees to accept less than the full amount owed to them, in order to price the home competitively and get it sold fast. A quick sale is the ultimate goal of this process. You can get a more complete definition in this Short Sale 101 article.

How Long Does It Take?

This varies from state to state, because the short sale process varies among states as well. In fact, the process can even vary from one home to another, depending on the lender that's involved. We have spoken to a real estate agent who specialized in short sales, and she referred to it as a "box of chocolates" (a tribute to the movie Forest Gump), meaning that you never know what you're going to get when you try to buy a short sale.

Some real estate agents pride themselves on their ability to facilitate short sales quickly, and they market themselves as experts in the process. While it's true that some agents understand the process better than others, the final completion of a short sale depends on many factors beyond the agent's control.

The key reason for this complexity (and the lag time that often results from it) has to do with the number of parties involved with the process. When you buy a home through a traditional real estate transaction, your offer simply has to be approved by the seller.

But when buying a short sale home, you will need to get offer approval from several parties -- the company servicing the loan, anyone who has invested in the loan, and perhaps even the mortgage insurance company. In some short sale transactions, there are even more people involved with the approval. Basically, anyone with a corporate responsibility or financial interest in the loan has input into the process.

You must also consider that, in a short sale, the lender is generally accepting less than the full amount owed to them. So they will exhaust their other options first before that comes to pass.

Knowing What to Expect is Key

If you are serious about buying a short sale home, you should find out exactly how the process works in your state, and perhaps even seek the help of a real estate agent who specializes in the process. Most of the common delays of this process will be outside your control. But by knowing what to expect before you get into the process, you can avoid a lot of frustration.

In my experience, the buyers who don't understand the process end up getting frustrated and disenchanted with it. We have receive many emails from angry buyers who wanted to know why the short sale was taking so long. These emails usually begin with: "We submitted our application weeks ago, but we still haven't been approved. Why does it take so long?"