So you found the perfect house and the description states it's a SHORTSALE. Before you get all excited over the prospect of buying that short sale house, contact your real estate agent. Ask your agent to research that short sale listing first.

In the general real estate market, about 25% of short sales transactions close. Just because that home is listed as a short sale doesn't mean it's really for sale (because it's subject both the seller and lender approval), nor does it mean it will sell at the advertised price. Here are 6 things you need to know before trying to buy that short sale

Why is it priced so low?

Many of not most short sales are priced below comparable sales, yet sometimes priced in line with pending sales. Why? Because short sales take anywhere from 2 to 6 months, on average, to close, and pending sales will become the comparable sales at closing.

Some short sales are priced ridiculously low. So low that the sellers' bank will never accept them. These types of listings receive multiple offers. But all is not lost. To get your offer accepted, it will need to be priced near market value. If you're not prepared to pay above a superficial price on a lowball short-sale listing, then pass on it.

Mortgage Amounts, Number of Loans and Lenders

Ask your agent to do research on how much is owed against the home and find out the number of loans that are recorded. Some has second and third mortgages. 

Also, some lenders, deserving or not, get a reputation for being difficult to work with. This is why it's very crucial that your agent is an experienced short sale agent, he or she will know who these lenders are and can prepare you for the difficulty you may encounter.

Look at the Short Sale Listing Agent's Track Record

Ask your agent to research the listing agent who is advertising a short sale.  Some  has never closed a short sale or has very little experience with working short sales. This is not only a waste of time but also place you in a risky proposition. That's because it's up to the listing agent to submit the short sale package to the lender and negotiate. Your buyer's agent can't talk to the bank.

Some listing agents hire outside companies to do their job, and the results of those negotiations are sketchy at best. Ask yourself, do you want to risk rejection of your short sale purchase because the listing agent has no experience?

Short Sale Seller Qualifications

Find out if the listing agent has received a completed short sale package from the seller, and ask about the contents of that package. A complete short sale package consists, at minimum, of the following:

• Sellers' hardship letter
• Tax returns
• W-2s
• Payroll stubs
• Financial statement
• Bank statements
• Comparable Market Analysis
  

Some sellers are slow to return these documents and may further prolong the process. Others have never been told by their agent that these documents are mandatory. You don't want your short sale purchase delayed because the listing agent doesn't have the required documents.

Number of Offers Received

Homes listed under market value will receive multiple offers. An agent is not required to disclose the terms of those offers, but you do want to know find out the number of offers you are up against.

Here's how it generally works:

• When a short sale home first comes on the market, the first offer will most likely be a tad below list price.
• The second, at list price.
• The third offer will be slightly higher, maybe by a $1,000 or $2,000.
• The fourth offer will be significantly more.

You want to make an offer that will beat the competition yet still be below market, or don't waste your time.