Buying Short Sales-
Things to consider
Buying short sales can be exciting and frustrating. When a person makes a decision to buy a home, they usually want to buy now. Since the majority of homes for sale in a declining market are those of people who have to sell and those that banks need to sell the inventory the home buyer needs to be extra cautious.
Owners in a short sale situation may not have had the funds to maintain the property, so there may be areas that require immediate maintenance- roof, heating, termite work, etc. Although when buying short sales the homeowner is required to sign property disclosure forms, a home inspection is highly recommended to potentially uncover matters that even the homeowner was unaware.
Owners of foreclosed properties may not have wanted to leave and in some cases, took their frustrations out on the home. Missing appliances, holes in walls, missing fixtures can be common and if a property
sits for a particularly long period of time there can be extra termite damage, mold issues broken windows and possibly vandalism. This doesn’t necessarily mean that a property is unsalable; it means the home buyer needs to be extra cautious when making the purchase to budget unforeseen expenses. Since the bank has never occupied the property, they are exempt from any disclosures so the buyer needs to investigate the property themselves.
Buyers of distressed properties- short sales and foreclosures need to also realize that the transaction will most likely not close as quickly as a traditional sale. A short sale must be approved by the seller’s lender – or lenders if there is more than one mortgage, and the buyer needs to be aware that the price at which a property is listed may not be the price the bank approves. Since in both short sales and foreclosures banks are taking large losses (and they are sifting through an overwhelming amount of files) it can take longer to receive approvals or paperwork. Buyers will need to take this into consideration and budget accordingly as it may be necessary to find temporary housing (extend lease, move in with a relative), rent a storage facility etc. while waiting for paperwork to be finalized.