Often priced below comparable homes in the area, short sales can be particularly alluring to buyers -- though they can often present frustrating challenges.  

Most importantly, unless a listing specifies that a short sale has been approved by the lender, the buyer might find they have been misled. Just because an agent lists a home as a short sale doesn’t mean it is one. The listing agent and the seller might simply be betting the lender will accept a short sale at the price they are offering it. That bet, however, can often be risky.

There are three reasons why a property may not qualify as a short sale: a.) the offered price is too low, b.) the buyer doesn’t qualify, or c.) the seller does not qualify for the short sale.

In order to establish the value of the home before considering any offers, typically a bank will order an appraisal. The appraisal measures the home’s value by examining the comparative sale prices of three recently sold homes in the neighborhood.

Should the offered price be significantly lower than the appraisal, the bank is likely to be unwilling to accept the offer for the sale of the home.

If the offered price is acceptable, however, the bank will require evidence that the borrower qualifies for the home. Ordinarily, they will demand a credit report, evidence of sufficient assets to close the transaction, and a preapproval from a lender. In some cases, however, where bidding takes place over a particular property involving multiple buyers, they may elect to accept only cash.  In such cases, the buyer is required to demonstrate proof of funds

Ultimately, it could well be that it is the seller who fails to qualify for a short sale opportunity. A seller who asks for debt forgiveness and has assets, and is unwilling be work out a repayment plan with the bank, will have to prove hardship. The bank will request documentation of their current finances along with a letter explaining why they can not afford to continue making mortgage payments. The seller will need to adequately plead their case. Simply looking to avoid foreclosure is not an acceptable reason for a lender to accept a short sale.

Buyers interested in short sales need to be long on patience. Waiting for the lender to accept or reject a short sale can be agonizing. It can often take a month or more for the lending company to even respond to an offer, placing buyers and sellers in a frustrating state of limbo. Many buyers walk away from short sales because they simply can't endure the waiting and red tape that’s involved. Unlike regular real estate sales, lending companies often don't even respond with a counter offer. They simply reject the sale, leaving both the seller and the buyer feeling confused and disappointed..

Because the short sale process is often fraught with difficulty, many buyers simply don't feel it's worth their time considering them. For those who can bear the waiting, however, short sales can provide buyers with a great deal on a home, and a positive solution for sellers.

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