The 5 Don’ts of Buying a Short Sale Property
A short sale property often looks like a wonderful deal to a potential homeowner. While there are some gems to be found there are many pebbles to sift through.
Not every house is made equally and there can be problems with a short sale house. The previous owners can be the cause of some of these problems and someone purchasing a short sale property should always be wary and double check all aspects of the house.
Do Not Assume the Property is Worth Buying
When someone is in a situation that they have to short sale their house, they often become jaded. An owner will short sale their house for less than the amount they owe on the mortgage. This is usually when a house’s value falls lower than what it was worth when it was first purchased.
There have been many instances where the owner does not want to leave the property at its best. They may be in financial trouble and are facing foreclosure on the property. To reduce their frustration some people will tear the house up. They knock holes in the walls, tear up the carpet, and generally ruin the house for the next buyer.
For these reasons, it is important to do a thorough walk-through and learn about all the problems in a house.
Do Not Forfeit an Inspection
An inspection will help to bring any problems to light. Avoiding an inspection due to time restraints can get a buyer into a lot of trouble. Any inspector that is good will be able to point out issues that may cost the buyer thousands of repairs.
By getting a thorough inspection a buyer can make a proper decision on whether the house is worth purchasing or if there is too much damage to be salvaged.
Do Not Buy Before Researching
In many sales with a bank owned property, there will not be a disclosure on the house. The buyer will have to learn about the property on their own. This means it could be in a floodplain or have other legal issues that may follow the house when there are new owners.
It is much better to learn about any legal problems before purchasing than to be stuck with the bill for something the previous owner started.
Do Not Rush the Process
A short sale is typically longer and more complicated than a typical sale. There has to be approval from the original lender to sell the house for less than it is worth. Some banks are overwhelmed by the requests that they receive, and will not respond promptly.
Even though this slows down the process it is a needed step in purchasing a short sale property.
Do Not Ignore the Problems of a Short Sale
Many buyers are looking to get a deal with a short sale. They imagine themselves purchasing for cheap, renovating, and living in their dream home. While many people know renovations will be needed, they do not know how much they will cost. Under-estimating is a huge problem for someone purchasing a property that may have problems.
Buyers should concentrate on the property’s value and the possibility that the value may drop again. A buyer should also research what renovations are needed and how much they will cost. Understanding what the property will cost, in addition to the mortgage, will help a buyer decide if they are willing to spend that much money.
Buyers who are looking at short sale properties should always research properties that they are interested in. A short sell will not always be the dream house a buyer is looking for. There are often major problems with the structure of the house and the bank does not have to disclose any information. An inspection and research will save a buyer from making a huge mistake that could set them back financially.