Interested in Buying a Short Sale? Watch Out for Potential Pitfalls
You might be considering buying a short sale when looking for your new home. After all, you can save a significant amount of money by buying one of these residences. But, as a recent story in the Chicago Tribune says, you need to be careful, too.
That’s because buying a short sale can leave you with a home that needs plenty of renovation work. And that extra work could gobble up the money you thought you were saving. A short-sale home in particularly bad shape might even end up costing you more than if you bought a traditional home.
A home is sold as a short sale when lenders agree to let its owners sell the property for less than what they owe on their mortgage loans. This means that short sales are often sold for lower than market-rate prices, attracting buyers looking for a solid bargain.
But a short sale, while it might be a deal, can also come with some big problems, mainly in the form of maintenance and repair issues.
Many homes are sold as short sales because their owners are in danger of falling into foreclosure. A short sale is their last-ditch effort to move the home quickly. Such owners often struggle to keep up with the financial demands of maintaining a property. If these owners are struggling to pay their mortgage bills, they might not have enough extra money to repair a damaged roof or replace sagging flooring.
That’s why before you buy a short sale you absolutely need to hire a home inspector to tour the property. An inspector will locate potential problem areas with a home. And this professional will be able to estimate how much you’ll have to spend to fix these areas.
Yes, a short sale can be a way to buy a home in a neighborhood that would otherwise be out of your financial reach. But be realistic when approaching one of these properties. You don’t want to be surprised by giant repair bills after you move in.