Not a day goes by that I don’t get a question about short sales. My short reply is to tell folks to pass on them and read my columns “Short Sales: Don’t Waste Your Time” and “Why Short Sales Don’t Work”. The market has changed a lot since I wrote that column and yes, there are tons of short sales happening every day. The question is, are they profitable deals for investors, or just a more complicated way to get a house for a slight discount to market value?
At first glance, a short sale might seem like a win-win for everyone involved. The defaulted owner sells the home for less than the amount owed and the lender forgives the difference. The sale releases borrowers from their obligations and for the lenders; it can be less costly than foreclosure. For buyers, it seems to be an opportunity to buy a home at an attractive price. The key word here is “seems”.
But short sales are not easy deals. Here is why:
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