If you look through homes for sale in Malden, MA or in any city you’ll see that there are many being sold “subject to third party approval”. What does this mean? The current owner is having trouble paying their mortgage and the house is no longer worth as much as the mortgage is. They have a financial hardship and their bank has 2 options – foreclose on the property or agree to accept less than what they are owed.

On the face of it, you’d think that this would be an all around good solution. The seller saves their credit, the bank doesn’t have to deal with the expense of a foreclosure (a lengthy and expensive legal process) and the buyer gets a good deal on the house.

The reality of a short sale can be different.

• Not all short sales are good deals, so make sure that your buyer’s agent goes over comparable homes with you before you put in an offer.
• Not all banks are open to short sales. Even those that realize the logic of agreeing to a short sale are normally drastically understaffed so it can take months (yes, I said Months!) to get a response.
• Many banks are also no longer allowing a home inspection contingency which means that if you’d like to have an inspection, you’ll need to do it before your offer is accepted, risking the money on the inspection on the chance that not only will the seller accept your offer, but that their bank will agree to the short sale in the end.

The bottom line is, just with everything in life, there are positive and negative aspects to short sales. Just make sure you go into the process with your eyes open.