Don’t Make These 5 Mistakes When Buying a Short Sale
A short sale can be the solution that homebuyers are looking for when searching for a sale. They often sell for below market value and avoid some of the issues that foreclosed homes have. However, it doesn’t mean that you should just rush into the deal without proper consideration. Here are 5 common mistakes that you will want to avoid if you are interested in buying a short sale.
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Not hiring a home inspector
Not only should you hire a home inspector to look at the house before you buy it, but you should also be present when the inspector is there. Ask questions as the inspector walks through the house. Make sure you choose an experienced inspector that will know exactly what they are looking for. You don’t want to chance any expensive areas that need to be repaired being missed.
Once your inspector provides you with the completed report, spend time researching what the costs are involved with making necessary repairs. This information will help you determine what the house will really cost you and help you decide if you can afford it.
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Overlooking other problems
Homeowners are not happy when they lose their home to foreclosure. Many times the homeowners will not only begin to neglect the maintenance of the house, but also do intentional damage to the house. They have the mindset that if they can’t enjoy the house, then no one should be able to. These same problems exist with short sales. While the owner may still be living in the house if they feel that a foreclosure or being forced out of the house is inevitable, they might take the same path. The damage they cause can range greatly, but should not be overlooked.
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Not conducting due diligence
When buying a short sale you are usually going to be purchasing the house as-is. That means it’s your responsibility even more to do the due diligence to look into the background of the house. Research what types of insurance claims have been made at the property. Has there been flooding in the area?
You also want to find out what renovations have been done on the house and research if permits were pulled for the work. If no permits were pulled, you will want to thoroughly have a home inspector look at them. There will be no guarantee that the work was completed to code.
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Trying to make it happen fast
If you are in the position of needing to find a home quickly because of a relocation or if your current house has sold, a short sale might not be the right option for you. The lender that holds the current mortgage on the house has to approve your offer before you can move forward any further with the deal. If the lender already has a lot of foreclosures on their books, it can take them awhile to get to your deal. The entire process can take months longer than it would on a traditional sale.
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Falling in love with the house
Remember that if this house doesn’t work out, there will be other houses to look at. If you start to get emotionally connected to the house you are looking at, you can end up talking yourself into a bad situation. Do not ignore the facts when you are deciding if you should purchase the house or not.
The right short sale can provide you with a great deal on a house. However, if you don’t pay attention to the areas mentioned above, you can end up trapped in a money pit. Take the time to do your due diligence and be willing to work through the process. This will help you determine if you are finding a diamond in the rough, or just another house to pass on.