Considered buying a home? Consider buying a short sale. With a short sale, the homeowner will need to be in default before the lender will consider a short sale. With a typical short sale, the homeowner's lender is accepting a smaller payoff to release the mortgage. A short sale is also sometimes referred to as a "preforeclosure". It is an alternative to foreclosure and bankruptcy proceedings.

Many investors purchase short sales in order to get a home at a much lower price. However, just because a property is listed with short sale terms do not mean the lender will accept the buyer's offer, even if the seller does accept it. The seller's lender will be considering many factors in deciding whether to approve a short sale, including whether the seller is deserving of a break, due to financial hardship caused by unforeseen circumstances such as layoffs, divorce or illness. The lender will also consider whether it would be less costly to simply repossess the house, make any necessary repairs and sell it through a real estate agent. Just keep in mind that the final word comes from the lender, not the seller.

Always do your research first. Your real estate agent can find out who is in title, whether or not a foreclosure notice has been filed and how much is owed to the lender(s). This is important because it will help you to determine how much to offer. If there are two loans, you will probably deal with a second mortgage lender.

Keep in mind that short sales take more work and time. You will be in constant communication with both lender and seller. The lender will have numerous forms for you to complete. Most of those forms will require the seller's signature.

You can find a list of short sales (preforeclosures) on many different websites. We include a section labeled "Foreclosures" on our website. Within that section, you will see the foreclosures status. Look for the word "Preforeclosure".

Buying a property on short sale can be frustrating and time consuming. However, your hard work can pay off in a home that's worth considerably more than you paid for it!