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In a "short sale", a lender and the owner of a home agree that the lender will accept less than is owed to pay off the mortgage loan on the house. The seller is "upside down" in most cases, and owes more on the house than they can sell it for.

As a buyer considering the purchase of a short sale property, it's important that you clearly know what to expect. Timeframes and processes normally experienced during a real estate transaction will not apply in a short sale. Instead, buyers should expect weeks and weeks of waiting followed by demands of quick responses, followed by more waiting and so on. A buyer of a short sale property must have enough interest in the home and enough patience to be willing to wait AND have enough flexibility to jump up and close on minimal notice. It's not a buying experience for the faint of heart.

There are a lot of things that go on behind the scenes and there are many people involved in the approval process of a short sale. It's not up to the sole discretion of the primary mortgage lender to approve a short sale. Often times there are multiple lien holders on a property. PMI, Fannie Mae and/or Freddie Mac are three other entities that also must approve the short sale. All of this takes an extensive amount of time and effort to coordinate and there is no guarantee approval will be granted for the short sale.

So, if you have what it takes to ride out the bumpy ride of buying a short sale property, you could be rewarded with a good buy. If, however, you lack the time, patience and flexibility required, a short sale purchase is probably not for you.