This unique market has made the playing field pathetically even for any kind of sale. In a healthy market, most homes are selling at value. The few that fall to foreclosure will sell for significantly less. These days, almost all the sales ARE distress sales, so that's where the bar has settled for now. People tend to love "buzz words" like "foreclosure," but these days, buying a foreclosure will have little, if any impact on the price paid for the home. Here's the skinny on types of sales during this market in the Greater Tampa Area:

1) SHORT SALES: These are the most common sales these days. I'll find it hard to limit myself to a few lines on this because there's so much to tell, but I'll try my best.

What is it? A house with a mortgage higher than what can be garnered from a sale. The lender does not base their decision on the loan balance. Their decision is based on the current value of the home.

Why does our area have so many? The simplest answer: We had a tremendous real estate boom that inflated prices and spurred a lot of sales. At the same time, there were mortgages awarded for as much as 125% of those inflated values. Many of those mortgages were misunderstood and many were even predatory. Now people are upside down and can't afford the homes.

What is the positive side of buying a short sale? First of all, to avoid all short sales, you'd be very limited in the number of homes to choose from, since they make up the majority of the market. It's more a matter of not being able to avoid them than purposely choosing one. Secondly, short sales are generally better cared for than foreclosures that oftentimes get trashed and gutted. Lastly, of course, is the fact that you save a lot of money because of the short sales, whether you buy one or not. There are many people who go through the short sale process, and after the agonizing wait and uncertainty, are rewarded with the house of their dreams for a fraction of what the value would be in a normal market. It's an opportunity, not a fun one, but it can be worth it.

What is the process of a short sale? This will be the hardest for me to explain in few words, so I'll start by stating that there are many, many details in the short sale process. A Realtor who is well-trained and experienced in short sales is invaluable throughout the short sale process. The following is a very limited description:

a) An offer is made on the house and the sellers (who won't be getting any money) sign it, making it a contract. Sometimes you can wait to give an earnest money deposit until after the bank's approval. Other times, you'll be asked to give a deposit so that you won't have to compete with other offers.

b) The contract is submitted to the bank along with a huge packet of financials from the seller, a closing statement showing the details of the offer, and the offer itself. If this 40-60 page packet is NOT in order before the offer, it can delay the process for weeks.

c) The banks are totally overloaded with short sales and it can take 2 weeks- 2 months just for a set-up person to put their hands on the file to be sure that it is complete for the negotiator. Once that's done, a realtor who is not involved in the transaction will be sent to the property for a Broker's Price Opinion (BPO).

d) Once the BPO gets back to the negotiator, she'll look everything over to see that the offer meets their general guidelines. If it doesn't, she'll negotiate terms so that they fit or the buyer can back out and get deposits if any. If the terms do meet the guidelines, she'll pass it on for approval.

e) Oftentimes, there are 2 loans in these instances. The first lender has the biggest stock in the property and has specific ratios to meet. The secondary lender often takes a small amount between $3,000-$5,000. This is added on to what the first bank will accept.

A note on price: value is value. People have many misconceptions about what a bank will accept. As I mentioned, distressed sales are now the rule, not the exception. Banks will only allow so much loss. My husband is in construction and we've seen a flood of homes getting rehabbed by banks in order to rent and then sell 3-5 years from now. A good Realtor should be able to tell you the approximate value of the home and have an idea what the bank will accept. Offers below the mark simply won't be awarded the home. Period. The banks have strict guidelines and they will rent instead of sell if those guidelines aren't met.

2) Regular Sales: Oh, blessed regular sales!! It makes me lightheaded to think of them. People who've taken care of their homes, have equity, and can sell in a dignified, up-front manner! They are few and far between. If you find one you love, you should jump on it! They have to compete with all the distress sales, so you'll still save gobs of money. Most sell for exactly what their short sale counterparts sell for; however, If they're asking for a bit more- maybe 3% or less, you'd do very well to pay the bit extra with a smile. You send an offer, you'll usually get an answer within a week, and poof!! You're a homeowner. Let's contrast that with a bad short sale scenario: You find a house you love and give an offer. You wait 4 months for an answer, while picking out drapes, planning your life, etc, only to be dumped at the last minute because the bank won't accept your offer. Then, you have to start from the beginning again. Avoiding that when possible is awesome and rare!

3) Bank-owned properties. These are homes that have already been foreclosed on. You can usually expect an answer within a week or two. Since the house is already foreclosed, there will not be a second loan to satisfy with an extra $3,000 either. The time part and the deal part of these are great. There are much fewer bank-owned properties than short sales.

The down side: Because they're so much easier to buy, there are often several offers getting to the bank at once. You have to give "your highest and best offer" the first time or risk being outbid by someone else. Many bank-owned homes also have been damaged or stripped, so it's harder to find one in good condition. If you find one, send in your best offer!

4) Foreclosures: Everybody LOVES this word! In normal markets, people with CASH have been able to buy foreclosed properties on the courthouse steps. First of all, notice that I said CASH. Most people don't have access to that kind of cash. Secondly, once it's bought, it's bought. You won't have the opportunity to inspect it later. In the 3 options above, you give an offer, then upon acceptance, you schedule a home inspection that costs between $350-$500. If the home doesn't meet your standards, then you can get out of the deal. On a foreclosure, you'd have to do your inspections BEFORE knowing if you'll win the bid. On top of it, there are very few homes with equity to make these sales possible.

Lately, there's a new kind of auction market going on which is more a gimmick than anything else. These homes can be bought using loans because they're not the same as buying at the courthouse. They are more to give a sense of urgency to the buyer than to get a better deal than you would from a normal or short sale. In fact, they have the audacity to auction short sale properties!!! That means that you'd have to:

1) Make a decision in haste
2) Pay for an inspection ($350-$500) on a home that you may not win the bid on OR forgo the inspection altogether.
3) Give a 5% NON-REFUNDABLE deposit within 24 hours of winning the bid.
3) Wait for 3-6 months for an answer from the banks who have liens on the property, just to learn that your winning auction bid will not satisfy the bank!
4) If you are awarded the property, the price is going to be about the same that you would pay on any of these other sales AND you'll have to pay an auction fee on top of it!

It's honestly ridiculous.

In short, bank-owned and regular sales are the best, followed by short sales which are nearly impossible to avoid. Many buyers gripe, but I find it kind of silly. If it weren't for these challenges, they'd be paying up to twice as much for these same houses. We don't have to enjoy the process, but if it makes it possible to get such great deals, it's well worth it! It was much easier to buy during the boom, and look how that turned out!