Buying a short sale home take a little patience as the buying process is a lot slower. However, most banks, lenders and homeowners with underwater mortgages will prefer short sales over foreclosures for many reasons. This allows a home buyer to not only receive a home for sometimes 18% less than what the home is worth, but also may help a new home owner purchase a property in an area that they would not normally be able to be approved by lenders.

With short sales, through an agreement with the lender, the house is sold for a portion less than the loan amount owed by the homeowner. Also, the homeowner can qualify for a tax break from the IRS for the portion of the forgiven loan by the bank.

It is estimated that a foreclosure home costs lenders roughly $20,000 which is why avoiding foreclosure and offering a short sale is a motivating factor for all parties involved. This cost of foreclosure can result in incentives by the banks to get homeowners to buy. Most often times banks are more responsive, also lenders or homeowners may agree to pay closing costs saving you several thousands of dollars.

The first step to buying a short sale, or any home for that matter is deciding on what type of home you are looking for. If you are an investor looking to flip a house rather quickly, you will want to focus on high demand houses or locations. Although there might be houses that are cheap, they may not be what you are looking for. Don’t just buy a home that is “affordable”.

The main downside to short sales are the length of time that it takes to complete a deal. This gives the option for other buyers to inquire about the property.