Southwest Florida has some of the most sought-after high priced oceanfront real estate in the nation, but many buyers are also finding great deals here. A wide variety of new custom condos and homes in the area are being sold at surprisingly affordable rates, discounting the notion that only the wealthy can afford to live in cities like Fort Myers and Cape Coral.

In fact this trend can be spotted in high-end markets throughout the nation, and not because of anything wrong with homes in these areas. In many cases it's due to a high percentage of "short sale" properties. A short sale can occur just before a property enters the foreclosure stage when the owner is behind or defaulting on mortgage payments. At this point the bank or lender may decide to re-sell the property at a discount, rather than go through with a time-consuming and expensive foreclosure.

During the most recent national real estate boom, high demand in hot markets like Southwest Florida drove prices way up and left many property owners with mortgages and property taxes they couldn't afford to pay. The lenders who financed much of this speculation found themselves willing to take a slight loss in the short sale market for a couple reasons: a) with property slightly overvalued due to speculation, any resales would necessarily fetch a lower price; b) foreclosures take much longer to complete than short sales, require a lawyer in most cases, and risk leaving the lender with a much lower price if the property goes to auction.

Also known as a "pre-forclosure" sales, short sales represent a great opportunity for savvy buyers and investors. Those willing to do the little extra work can often obtain a discount of 20-25 per cent, without waiting for a further decrease in the market. So what extra work does a short sale require? It is a bit of a process, but knowing the steps can save you a lot of time and energy. Short sale transactions typically start with the original borrower who's defaulting on the mortgage. It's up to the investor to liase with the borrower and lender, and make sure all financial information is shared. The investor must also work to portray the short sale property as one that's lost market value, and in need of improvements. A high contract bid for repair work on the property, forwarded to the lender, can be a convincing piece of evidence here. Finally, the lender will ask to see a contract between the investor/buyer, and the seller, to make sure the seller isn't making any money from the deal - the "net cash" paid to the seller in this transaction should be the same amount paid to the lender.

Smart buyers can make a good return for their investment in a cooling but dependable market like Southwest Florida, and short sales are an effective strategy for this.