When you buy a short sale, you are getting a discount based on what the last person paid when they purchased the property. Today’s real estate market is following a recently past housing boom where some house prices may have been overinflated. Therefore, the current value of a home in today’s market may actually be less than what the last person paid, making the short sale not such a great discount or value. That does not mean it is never a good thing to do, but rather it would depend on when the house was last purchased, how much they paid for it, and were there any renovations or improvements done.
It really does not help the uneducated buyer when they listen to the news media. People might believe that they can get a great deal right now with the inventory of homes for sale being so plentiful due to foreclosures. That may be true in some cases but not across the board. The keen investor will want to do some research into the property’s history. This research needs to be completed to do a current market analysis on the property. An experienced realtor would be your best bet to guide you through this process when considering a short sale purchase.
For the majority of short sales you would do best not to make an initial offer. Instead, wait to see if the home reverts to the bank at auction. After that, look for it to appear on MLS with a list price. Finally, you will be ready to make an offer.