Short sale question

[Daniel Brown]

Hey guys! I have a couple of questions about a short sale. I originally found this property on the mls for 80k. It's actually in a really good area in the city and it's near a couple of schools. The arv comps for this area run conservatively 205-210k. A house on the next street over sold back in June for 225k. Also rent comps in the area range in the median of 1400 if brrrr

Now my questions are what are some of the drawbacks to buying a short sale if any? 

What are some things to watch out for when buying a short sale property?

Can I give a lower price to buy than the initial price on the mls? 

Thanks in advance!

[Christopher Phillips]

@Daniel Brown

The quick answer is that the $80K is not the real price unless it specifically states "approved shortsale."

Otherwise, it's a super deep discount to what the bank will actually want to sell the house at. That makes it difficult to do any analysis until you see the house. You can offer a lower price, but it's usually already discounted 10%-20% or more. I'm seeing 50% discounts lately.

End of the day, the list price is meaningless. The only price that matters is the price the lender determines what they want (along with the investors that bought the loan), which you won't learn about until after getting it under contract and the paperwork is submitted to the bank for them to review.

The second problem is that they have become difficult to show. Many properties have tenants that don't want to be bothered. Or the owners are being difficult. That makes it hard to determine the condition.

time is the other issue. The lender marches to the beat of their own drum. It can easily take a year or more just for the deal to fall apart on you.

Lender doesn't care if you're paying cash or not. They just want to recoup their money.

Lenders don't visit the property. They will try to get market retail prices regardless of the condition.

Deals die all the time. The seller has to be cooperative and submit their hardship paperwork. If they don't want to go through that process, it can be a waste of time for everyone.