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When selling foreclosures, banks are often more concerned with making a fast sale than with getting the highest price possible.

The problem is that, practically speaking, many of these "deals" may not be available to you.

Remember, when we are talking about short sales (sales in which the seller's proceeds will be less than his outstanding mortgage debt) and foreclosures (sales in which the lender is now the owner and seller), we are talking about banks in the position of ultimate authority. And, what I see buyers running into regularly is a kind of "discrimination" on the part of the lenders. It's legal, but it is discrimination nonetheless, and it involves financing.

Supply and Demand

Short sales and foreclosure sales typically conjure images of the year-end clearance sale, and for good reason. These homes usually carry attractive (often, overly-attractive) price tags. Banks have to consider the costs of holding an unsold, non-income producing inventory or, in the case of the short sale, increasing this inventory through yet another foreclosure. So they are able to justify their low pricing strategies. Banks have no interest in becoming land barons; their goal is to move these properties swiftly.

The result is two-fold: Competition can be fierce for lender-controlled offerings; and prices which appear too good to be true usually are.

While many of these properties will in fact sell for less than what you might consider "market value," a perceived under-priced offering in today's market is like chum tossed into the shark tank; every would-be buyer on the sideline, including a lot of well-financed investors, is jockeying for a piece of the action. Prices often get bid far over asking price. When a seller has choices, it is survival of the fittest.

Another thing I am seeing more often, though, is that "fittest" doesn't necessarily mean "richest."

Not All Buyers are Created Equal

So, here's the part that feels more than slightly unfair if you are the typical buyer. Where yesterday it was generally understood that sellers were concerned only with the bottom line -- money -- banks today are less concerned with the bottom line and more focused on speed. This is because, for lenders holding either a non-producing loan or a vacant property, time is money.

Consequently, we have been seeing restrictions attached to distress sale offerings. "No FHA or VA financing" is a common one. Government loans can be a hassle, and banks don't want hassles. "Property sold as-is" and "No termite inspection or home warranty to be provided" are a couple of other popular disclaimers.

The zinger is "Only all-cash offers accepted." Yes, we see this one a lot. We see it for the same reasons. Lenders don't like hassles, and loans can spell trouble today.

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