If you are looking to save money on a home, you may consider buying a short sale. These are homes that the seller and the bank agreed to sell for an amount less than it’s worth. The sales price usually satisfies the amount of the outstanding mortgage balance. This can only be done with the lender’s permission.
If you are lucky enough to find one, you could save a significant amount of money on a home. Before you do though, learn the top five mistakes buyers make.
Skipping the Inspection on a Short Sale
You might be in a hurry to get dibs on the home because you’ve fallen in love with it and think you should just skip the inspection. You want to get the mortgage approved and the sale closed so that the bank can’t change their mind.
Don’t be in such a hurry, though. Take the time and pay for the inspection. In fact, tag along with the inspector to see what might be wrong with the home. Sometimes when homeowners know they are losing their home, they take their frustrations out on the home. Even if they didn’t, chances are they couldn’t afford normal maintenance on the home if they weren’t making the mortgage payments. The house could be in more disrepair than you realize.
Not Reading the Fine Print
There’s more to the story than just the mortgage that the homeowner didn’t pay. There are real estate taxes and possibly homeowner’s association dues too. These liens become your responsibility if you buy the home, so you should know the depth of the damage done.
If there are past due taxes, chances are they are rather costly. You might not have to pay them in full, but you will need to negotiate a settlement, which your real estate attorney can assist you with to make sure you don’t get taken to the cleaners. You may not have as much negotiation power with the taxes as you would the association dues, though. Talk with your real estate professional to determine where you stand. This way you can decide if the purchase is right for you.
Needing a Home Quick
There is nothing quick about the short sale process. It’s not just up to the seller to determine if you can buy the home; it’s up to the bank. They have the final say and they usually take their sweet time making that decision. Sometimes it’s not even the bank holding things up, but the county due to the tax liens. There are many interested parties in the process that can make the process move slowly.
Keep in mind that it’s not unusual to sit on your short sale offer for 90 days before getting an answer. If you sold your home and are hoping for a quick sale, buying this type of home is not in your best interest. You have to have patience and time when deciding if it will work for you or not.
Making an Emotional Decision
It can be so easy to fall in love with a home, forcing you to make a rash decision. Don’t let that happen to you. Even if a home you’ve admired for years goes into short sale and you get excited at the thought of buying it for a steal, don’t do it.
Take your time and do the above steps. Just because you love a home doesn’t mean it’s in the condition you think it is. A quick walk around it might show that it’s in disrepair and it will cost you thousands of dollars to repair. A quick search of the title may also show that you would owe thousands of dollars in back taxes to get the home back in good status.
Before you make that emotional decision, know the facts and weigh the pros and cons. Can you afford the loan? Can you afford the repairs? Is it really worth it?
Buying a short sale can be exciting because you could get a great deal on a home. This isn’t always the case though. Don’t judge a book by its cover. Instead, take your time, learn about the pros and cons and talk with a real estate professional to make sure you are making a sound decision.