The last question you should have your Realtor ask is if they have already started the short sale and where it is at in the process. They may have had another buyer who just got tired of the waiting game and cancelled the sale to purchase another home. If this is the case ask if the BPO, Brokers Price Opinion, has been done. This is a market analysis that banks do on the home to insure they are selling for the correct market price. So if you are buying a short sale thinking you are getting a home for under the market value then put that thinking away. You are not and the bank will insure that you do not. If the BPO is done by the lender or lenders this will drastically decrease the amount of time it will take before you have an answer on your purchase.
The amount of time it takes to complete a short sale varies. If you were to put a time limit on it I would say a normal short sale takes between three to six months. That said I have seen short sales take a year. But that was in a very extreme case. After all that time your short sale may not be approved and the bank will put it in foreclosure if it has not already done so. The why of it has always escaped me? I have seen banks do some very crazy things when it comes to these loans. I have a friend that deals with these who had a home I helped with, that needed a short sale. The people owed in one loan $800,000 on the home and the house would only sell for $480,000. There was only one loan and the bank said no to a short sale. They then put it into foreclosure and purchased the home themselves at the Sheriffs Sale for $280,000. Fortunately for my friend and his sellers the bank did not take the time to look at our state laws. The law specifically states that if the home is purchased at Sheriff’s Sale then the all that needs to be done to satisfy the loan is to pay the bid amount not the loan amount. My friend brought back the buyers. Sold the home for $480,000. Paid off the bid amount and put over $150,000 in his sellers pockets. The bank actually lost over $150,000. Just does not make sense does it. Welcome to the world of short sales.
So to answer the question should you buy a short sale? Yes if you are willing to wait the extended period of time it takes to get one done. Yes if you are alright with the bank saying no and then having to walk away after all that time. Yes if you realize that you are not getting the deal of the century and that the home is going to sell for the market value. However, it is important to note that I always try to steer my clients away from them for the above reasons.