In a real estate transaction, tensions between homeowners and buyers can run high. Complicating the matter, both buyers and sellers often have agents working with them, and the lender for each party also factors into the mix. For short sale real estate transactions, negotiating the sale price of the property, plus the long wait to conclude the sale makes the transaction even tougher. There are a lot of things that can derail a real estate transaction, and even more factors that can scuttle a short sale.

As a short sale investor, how can you spot transactions that are going to go bad before you get too far into the process? As a buyer, there’s not much control you have over the process. Unless you bring your own short sale professionals to the party, the seller’s agent will have to get into the ring with the seller’s lender. If that agent isn’t experienced in short sales, you could be in for a long, fruitless negotiation. If you’re considering making a short sale offer, either plan to bring your own short sale negotiators into the mix or spend some time learning exactly what the seller’s agent knows about short sales.

If you plan to make a short sale offer, sharpen your pencil before going in. Banks won’t accept fire sale prices unless the home is badly damaged or has very little market value for other reasons. They’re willing to tolerate some loss, but they won’t accept a super-low bid without a very good reason to. Keep in mind that the short sale may well be the seller’s last chance to avoid foreclosure, but the primary lender won’t end up empty-handed if the seller defaults. They’ll get the property, if nothing else. Make a reasonable offer based on the condition of the house, the surrounding market and the economic conditions at the time of the sale. The bank has many tools at its disposal to determine the value of the house, so if your bid is exceptionally low, be prepared to see the door.

Speed may be of the essence for both the buyer and the seller in a short sale real estate transaction, but the opportunity to pull off a quick short sale won’t enthrall the bank, no matter how the deal is structured. Be prepared to wait. And wait. And wait. If you really want to buy a distressed property on a short sale, you’ll need to roll with the punches for perhaps six months or more.

Photo Credit: Fingers SFV, at Flickr