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Information about short sales is hard to come by even though in many parts of the country, the real estate market is littered with them. A short sale is when a person owes more on their home than the home is worth, and the bank is willing to sell the home for less than what the owner owes.

Until a few months ago, short sales were a dead end for buyers. In April 2008, approximately ten percent of short sales that received offers ended up selling. Back then, banks were not willing to own up to the staggering losses that they were about to take. Most companies were still in public denial about the looming real estate recession.

Times have changed. Banks are not only admitting they are losing money but they are running to the government for bail outs as well. Even though banks are now willing to negotiate, it pays to remember that banks are not the same as private sellers and they do not play by the same rules.

Here is a short list of things to remember when trying to buy a short sale.

- You must have patience Banks can take months to make decisions. This is especially important to remember when it comes to getting you mortgage. If you are buying a short sale, it may pay to lock the rate for a longer period of time.

- Expect to negotiate Know what price you are willing to pay up front and stick with it. Not all short sales are good deals. When the bank sends you a counter offer, consider the details very carefully and reevaluate based on current market conditions.

- The banks are companies and are not as emotional as private sellers This can work for you or against you in your transaction. Since banks are out to make a profit, they think in terms of the bottom line. They don't care as much about an individual sale as a private owner would. On the other hand, they are expecting to take a loss on the sale of the property. In fact, this loss is now part of the bank's business plan.

- Find out if the short sale has already been approved by the bank If it is approved, your chances of success are much higher. This is particularly important because most banks will not allow a short sale unless the seller is behind on their payments. Short sellers who can make their payments but are just trying to avoid losses will be disappointed when the short sale gets rejected. If the short sale is approved, that means the bank has gone over the seller's financial situation and believes it is in the banks best interest to sell the home for less than the seller owes.

Author: Andrew Sturtevant
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