Do your homework before purchasing a short-sale home

A short sale takes place when a person, with their lender’s consent, puts their home up for sale for less than what they still owe on their mortgage. Home buyers in Saint Paul interested in a short-sale home may feel like they have found the house of their dreams at a real bargain. However, there are certain issues they should look out for before purchasing a short-sale home to ensure the deal isn’t too good to be true.

First, a buyer should not ignore problems with the home. Sometimes, homeowners selling their property in a short sale will let the house go to waste or may even purposely damage it. Moreover, if a home has been vacant for a while, issues such as insect or rodent infestations, broken pipes, mold or even thieves or squatters could damage the property.

For this reason, buyers interested in a short-sale home should make sure a professional home inspection is performed. In fact, if they can be present during the inspection, even better. If the inspector finds a problem with the house, potential buyers should research what it would cost to fix the issue. Keep these costs in mind when making a final decision to purchase the home.

Also, buyers should pay attention to any disclosure statements with insurance or legal information. For example, disclosure statements could reveal issues such as whether the previous owner made any renovations without a permit or whether the home sits on a flood plain. Since homes sold in a short sale are often sold “as is,” it is up to buyers to research this information.

Buyers interested in a short-sale home should also keep in mind that the closing process may take longer than it would in a traditional sale. The lender must agree with the price the home is being sold at, and they may take their time in doing so. Also, it is often not possible or even wise for buyers to try to obtain a mortgage from the same lender that approved the initial mortgage for the home.

In the end, buyers should not be swept away with what may seem to be their dream home in a short sale. They need to objectively assess the sale, keeping the home’s condition and price in mind. A real estateattorney may be able to help buyers determine whether purchasing a short-sale home is right for them.

Source: Bankrate, “5 common errors when buying a short-sale house,” Lora Shinn, Sept. 5, 2016