When buying a short sale, the lender for the seller has agreed to accept a discounted payoff amount. Upon receiving this amount, the lender will then release the existing mortgage; however, the lender must first agree to these terms. Most believe before the seller can consider a short sale his loan must be in a default status; this is not true.
Another scenario can create buying a short sale opportunity. The seller may owe more than the property is currently worth due to falling values in the market. In the event that this should happen, the seller will most likely agree to a discounted price to level the home's value with the current market value of the home.
Before buying a short sale, make sure you do your homework. The consensus of many are buying a short sale is the best way to find deals. There is some truth to this; however, if you are not careful when pursuing some deals they can become your nightmare. Just know that a short sale deal is not a simple process, and if time is of the essence to complete your deal, a short sale may not be right for you as they rarely close in a 30-day time-period. Therefore, when buying a short sale, buyers beware.
