A short sale is a sale where the price falls short of the loan. The Lender must agree to the sale. It is done to avoid foreclosure which can cost more. A note is left on the borrowers credit that the lender settled for less.
Consult a buyers agent to help you determine what an acceptable offer for that specific property is.
There are just too many unknowns to give one answer and there are many different things to consider - length of time on market, market area, comp price points, condition of home etc...
The explanation of a short sale has been taken care of here. But what hasn't been addressed is that the list price may or may not be a strategy.
It's possible the list price is a pre approved short sale price (via the HAFA program), or, the price could be strategic to get interested buyers coming through and possibly creating a multiple offer scenario, or it could be that it's fair market value. Hard to say without the address.
I would highly recommend you work with a buyers agent that is experienced in working with distressed properties. Short sale is not a transaction (or any other real estate purchase for that matter) that you should venture off on your own. The listing agent represents the seller and his/her goal is to get the most amount of money not to give you the "insight" of what he/she thinks the bank will settle for.
Your buyers agent will conduct a fair market analysis to ensure you don't over pay or at the very least you'll know what the market value is. Your agent will also negotiate on your behalf, write up the offer, provide you with resource, i.e. home inspectors, attorneys, lenders, contractors, etc...walk you through the entire buying process. All at no charge to you!
Interview a few agents, myself included, and determine who you feel has your best interest as a priority. Start with the agents that responded right here on Trulia.
The answers below are good explanations of a short sale. I would suggest you get a good buyers agent who has good experience handling these types of properties. This way you have someone to walk you through the process, at no cost to you. Interview two or three agents and go with the one you mesh best with.
Americorp Real Estate
Brokers Associate, e-PRO
A short sale home is usually listed at or very near the current market value. The banks are looking for the best and highest offer that they can get. It's not always price that the banks look at. Cash offers usually fair better then offers with financing if you are looking to make a low offer.
What you need to know about short sales, is that you are dealing with the seller and not the bank. The seller is the one who agrees to the terms of your offer and then presents the offer to the bank and asks the bank to approve the sale. Your offer gets accepted by the seller subject to bank approval. The bank can accept the offer, deny it, or counter the offer. It can take months to get a response back from the bank. It will all depend on the bank and what they have on their plate at the time. The seller can accept other offers, but they should be considered back up offers and presented only if and when the first offer is refected.
You may still do a home inspection but don't expect the seller or bank to give any money towards repairs. Also, as the buyer, there may be fees and costs that you would need to pay for in order to close. Another thing to keep in mind is that lately some banks are asking the sellers to sign a promisorry note for part of the amount the bank is forgiving. If the seller can not or does not want to do that, then the bank will cancel the closing. Make sure that you know the risks involved when dealing with a short sale.
I doubt that you found a 159K house in Highland Park, but wherever it is located my web site lets you search the MLS if you want to check out comparables or obviously I could help. I have worked the city & many Burbs, particularly the North Shore for over 20 years.
Good Luck! Adam T Barrera
If you are not working with an experienced Buyer's agent representing your best interest (Which I assume you are not since you are asking questions on this forum), feel free to contact me.
I am nationally and locally certified as a Short sale & Foreclosure Resource.
John Gall, ABR SFR
Realty Executives SourceOne