The term "short sale" sounds like a great deal. So naturally, when you see a home listed as a "short sale" you
 begin to imagine all the money you'll be saving by picking up this property at a "steal".  BE CAUTIOUS

The home is being offered as "short sale" because the seller is having financial trouble and is unable to sell the home for enough to pay off the mortgage. The only alterative is to reduce the asking price to "fair market value" with hope
that the mortgage holder will accept less than is owed.

Just because a home is listed as a short sale doesn't mean it can be sold for the asking price. The seller may accept an offer, but the mortgage holder may not agree to the price or terms of the offer. Unless the bank has agreed to accept
a short sale, prior to listing the home as such, there's no way of knowing if an offer will be accepted.

"Subject to lender approval"
The buyer want to buy, the seller wants to sell, and the bank wants their money. This should be a simple win-
win-win transaction. However, short sale listings contain the phrase "subject to lender approval" which means
the buyer is dealing with the mortgage holder, not the seller. This creates issues that don't normally enter into
a normal Buyer-Seller transactions.  

• The lender may not have officially agreed to accept a short sale. Just because the seller spoke with the bank, this doesn't mean an agreement has been reached. It's consistent for the lenders to simply say "Bring us an offer, we'll look at it." This arbitrary statement is not a commitment.
   
• Does the seller qualify for a short sale?  To qualify for a short sale, the seller must submit a letter of hardship that explains why he will be unable to payoff the entire balance of his mortgage. A short sale will be impossible if the seller has sufficient assets to cover the entire mortgage amount.
   
• Property condition. The seller is in a financial bind and owes more on the property than it's worth.
  He's probably not putting money into upkeep and repairs.
   
• Fair Market Value?  A property offered as a "short sale" implies something, but may mean nothing.
  The seller may have paid too much for the home, or borrowed heavily against it. Reducing an overpriced
  home to another inflated price with a "short sale" label doesn't make it a bargain. Other comparable properties, not listed as "short sale" may be better values.
   
• The Buyer's offer may be too low. The asking price could be based on knowledge of what the
  bank will accept. An offer too far below the asking price may be rejected. There is no law requiring a reply to a purchase offer.  It can simply be ignored.
   
• Time is of the essence?  Forget that phrase! Do you have the time to wait months for an response
  to your purchase offer? A small percentage of mortgage holders have taken as little as a few days to respond to an offer, but most take from one to six months. Sometimes there is no response at all. When asked, they  dodge the question by saying that the offer has been submitted to the investor for approval.
   
• The Mortgage holder's "short sale" competency.  Don't assume that the holder of the  mortgage knows anything about the subject property or mid-Michigan market conditions. It's likely that
  the mortgage holder purchased your note as part of an investment package along with thousands of others. They may not be physically able to deal with this offer in timely manner.