As a buyer short sale homes may look like a great deal, but the buyer should beware. There are a few things to keep in mind when looking at the listing for these short sale homes. Due to the loose use of this term there are many listings for homes that are being labeled as short sales but are really homes that are in Pre-forclosure. What's the difference you ask? It's huge.

A true short sale will have already been approved by the bank that the current owner of the home has a mortgage with presently. They have gone through the many steps that take months to get a short sale approved. As a buyer of one of these homes this means that when you put in an offer on a pre-approved short sale listing your offer will be taken seriously. Since the current lender is already taking a substantial loss on the property to begin with, a serious offer would be asking price for the home listed.

This makes the transaction extremely smooth and will run more closely to the purchase of a home that is not considered a short sale. As a buyer you will need to be pre-approved for a home loan before putting an offer on such a home. The lender will have the final say as to whether an offer is accepted rather than the current owner of the home. When it comes to a pre-foreclosure it is a whole other experience.

If a home is in Pre-Foreclosure and the seller of the home has not gotten the short sale price approved through their lender prior to taking offers then there is a very good chance that the offer will be rejected and it will have been a waist of time for a perspective buyer to put an offer on the property to begin with. When an offer is placed on a pre-foreclosed home the process of getting the short sale approved starts with the offer from the buyer. This is not the way the lender that carries the mortgage for a home wants or will do business. The lender may still work with the current owner to settle on a price but again, this process usually takes months. Leaving the buyer out in the cold.

Given the number of homes out there that are able to be purchased without going through such a painful process, it may be worth considering whether the cost of time and energy as a home buyer is worth it. As a professional in the industry I always have a long talk with my clients about this subject as they are looking at homes.