How to think about buying short sales

A short sale is a property that's being sold for less than the balance of the mortgages that encumber it.

Many home buyers are enamored of the notion that a short sale, because it's offered for sale for less than the current owner paid for it, is necessarily a bargain. It may or may not be a bargain and, I'd argue, it's no more necessarily a bargain than any other property on the market.

If you're looking to buy a home the way you should think about short sales is: don't think them until you find the home that's the best fit for your needs.

If you find that home and it's a short sale, ask yourself whether it's unique: i.e., is it the only home on the market that you'd consider buying at your price point? If there are homes that you like just as well at comparable prices, skip the short sale without giving it any further thought and make your best offer on one of the other properties.

Why is that? Because the short sale process is often long and is almost always unpredictable, sometimes wildly so. By entering into it you surrender control of a transaction that it's in your best interest to control or, at the very least, predict its outcome.

If you're determined to proceed with a short sale, my next post will give you some tips on minimizing the riskiness of your undertaking.