Is a short sale worth the effort? You’ve heard horror stories about short sale deals gone bad: closings that take more than a year, sales that fall apart just when everything finally looks to be going smoothly, declining property values, banks that simply stop communicating.

Is a short sale real estate transaction worth the trouble for anyone involved in the deal? Quite possibly, the short sale can be a good deal for everyone involved but a short sale may not be the ideal solution in all cases.

Few homeowners who acquired their properties in the last 10-12 years have their heads above water when it comes to their mortgages. Property values in many markets have dropped to levels below the property’s original purchase price. In some areas, experts say that the housing market won’t recover for as much as a decade. Others say that this drop has permanently changed the way property is valued. .

For the short sale investor, valuation is key, and investors need to be aware that property values continue to skid, even the space of six months. The lowball short sale offer you put in on a property today may turn out to be the best deal going six or eight months from now when the bank responds to your offer. Concluding the deal may mean that you’ve “bought high.”

For the homeowner, the short sale can be agonizing. You think you have everything going in the right direction and then your offer hits the bank. You enter a “cone of silence” where the bank says nothing – even to the point of not acknowledging your short sale offer. Weeks go by. You need to sell the home. You can’t afford the payments. The buyer is getting fed up and you don’t know what to do because the bank says nothing at all. (Did they even get the offer?)

For the bank, the short sale is just one of dozens, perhaps hundreds that the bank is considering. There’s a lot of work to be done. The valuation needs to be determined. Permission to accept the short sale may have to be received from the investors who now own the mortgage. Many desperate homeowners are clamoring for attention, and the offers they’re bringing simply aren’t acceptable to the bank.

In the end, little more than two out of ten short sale offers pass muster, but for those that do, the end result can be exceptional benefits for all involved.

Photo Credit: Adina DeAlma, via Flickr