A Buyer just asked me a great question about a home with a price that looked "too good to be true". Here's a generalized version of my response:
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The home you asked about is a short sale... Often you would have no way to know this without asking me to check it out a little. However, if you ever see something in the description like "Subject to lender's approval" (as this one has) it means that the Seller can't make the final decision. At the current price, the Seller will not net enough money to pay-off their mortgage. So, any offer will be "Subject to lender's approval". Basically, the Seller is going to ask their lender's permission to take less than they are owed on the mortgage. Why? A short sale is usually better than a foreclosure on your credit, and most short sales are headed towards foreclosure. That's one of the reasons it takes so long to get an approval on these... the banks don't want to lose money and often don't move very to quickly to approve them. However, if they see that foreclosure is the only other option, they may (eventually) approve the short sale. "Normal" approval time to get a bank's blessing is 30-90 days (though it can take longer) before you can start the 30-40 day closing process. Communication is also poor (at best) from most banks, so you often won't hear anything about your offer for weeks at a time. The worst part is that, even if you offer full list price, there is no guarantee that the bank will take it. The real estate agent typically decides the list price, not the bank (and they're being asked to take a loss). If you do finally get an approval, short sales can be an ok deal and save you a little money. However, these deals are very dependent on the Listing Agent, the Seller and their bank. If any one of these parties doesn't know what they are doing, or decides not to cooperate, you'll just have wasted a lot of time. So, most Buyers who have a specific timeline (i.e. want to be in a home by a certain date) tend to stay away from short sales. Also, there aren't any hard-and-fast rules about how multiple offers are handled. It completely depends on the Listing Agent and the Bank. So, you may put in an offer, wait for several months, only to have a higher offer submitted just before your approval is issued. It can be very frustrating. So, you also need to have no emotional tie to any home (because you will likely go through a couple of them before you get one). The best candidates for short sales are Investor-Buyers with no particular timeline and no emotional attachment to any home. Traditional Buyers, looking to buy a home to live in, tend to get frustrated with the short sale process and end up moving on to traditional or foreclosure sales (where response times, and communication, are generally much better).
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I hope that helps! Not to say that I can't/won't help traditional Buyers with short sales... I just want them to know what they are in for before they get started down that long and winding road.

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com