Honestly? The answer is "maybe".
A short sale can be a fantastic deal. Some are in need of repairs, and some are in beautiful condition. The important thing to remember is just because a home is a short-sale, that doesn't mean the bank(s) will take ANY offer, even if the Seller will. Take for example this fabulous townhouse we have listed for sale in Chantilly Virginia.
This three bedroom two bath townhouse is currently listed for $355K, a great price on this size townhouse in South Riding. The issue? It's a short-sale which means any buyer who submits an offer has to understand that there will be a negotiation period of at least 3, possibly 6 months to obtain approval from both the first and second trust. They also need to understand that just because the Seller agrees to the terms of their offer, doesn't mean the bank is required to.
We have already received several calls from agents asking if they could offer $20K below list price, one with a cash buyer who was certain that would make all the difference to the bank. Any contract on a short-sale home is subject to third party approval, and the 3rd party doesn't see Cash as any more appealing than an FHA loan or a VA loan. Truthfully, the bank/investor couldn't care less where your money is coming from. They care about two things.
First - they want to mitigate their losses. This means THEY WILL NOT TAKE JUST ANY OFFER THAT YOU PUT IN FRONT OF THEM. They are going to do the research. Before they agree to accept your offer they will have a local realtor or appraiser who is a neutral third party give them a value for the property. Let's face it, they're losing a LOT of money. Often in the 100 thousands. In many cases recently the bank actually comes back and asks the buyer for MORE than they originally offered.
Second - they care that you aren't doing anything fraudulent. They don't want you to buy the house for your cousin or your sister and let them rent it back from you at a lower cost because well, frankly that's unethical. They will likely require you to sign a statement saying that you are not in any way related to or affiliated with the Seller and that you do not intend to let them remain in the property after settlement.
This doesn't mean that you can't negotiate. But if you are a short-sale buyer, be cautious about looking at the top of your price range because you could end up waiting for 6 months only to find out that they will sell the property to you, but only if you are willing to pay another $15K that you may not have. So if the listing agent tells you you need to be "committed" to this offer and you need to be "reasonable with the market value" they aren't trying to gouge you, they're just trying to avoid months of stress for themselves, their seller and you that ends up being fruitless.
