Why No-One Likes A Short Sale

Short sales, along with foreclosures are a large part of the Phoenix area real estate market. Here are some tips to guide you through the minefield.
The general consensus is that short sales, where the owner owes more than the home is worth and asks for debt forgiveness, are a good deal. I am here to tell you, that while they can be, they are sometimes more trouble than they are worth. Both for the potential buyer, and for real estate agents.
Let me explain. First of all, there has been a growing tendency, which I deplore, here in the Phoenix area, to massively under-price a short-sale property. I understand why they do it. They must attract a qualified buyer in order to go through the process with the bank. To the inexperienced buyer, and indeed agent, the low price fairly leaps off the page. Many times it is priced at 70% of its true value. I feel that this is misleading. It is imperative that the experienced agent explain to the potential buyer that while it is priced at $495,000, for example, the bank will likely require closer to $600,000 to close the deal as that is the home's true value. The trouble is that some first-time buyers just think you are being a "slick" agent and are distrustful. Who can blame them?
The other thing that I find annoying is the banks' constant attempts to take money from my pocket. Understand that commissions are always negotiable, however never in the purchase contract, between seller and listing agent. Many times, however, the bank is taking a bath and tries to get the agent to join in by slashing the commission. By the way, the agent is under no obligation to do so. Sadly, many agents famously will do almost anything for a dollar, or food, so banks often get away with this. Couple that with the fact that a short sale involves a lot of extra work, and steps, so a bank should really pay more in gratitude for someone persevering and ridding them of a most-likely self-imposed bad debt.
And then we have the Realtor® - lemming of the type I encountered today. Before I even write an offer, they require me to sign a disclosure agreeing that whatever the bank decides to pay in commission, I will meekly split it with the listing agent. Bank says $10.00 and a slurpee, I get $5.00 and half a brain freeze.
If you have the range of choices available, as we do in Phoenix, buy the foreclosed home, or the home that is owned by a real live motivated seller. You will thank me for it.