Let’s say you’re going to sell your home. The buyer comes and sees your house but the offer is so low it does not cover the total amount of what you owe to the mortgage. You agree to sell your home for this low amount in fear of getting foreclosure. This is what you call a short sale.
A short sale is also known as pre-foreclosure sale since it’s all about saving yourself from the dreadful latter. This only happens when both the seller and the buyer of the house agree on the amount of the property. Short sale is a win-win situation for the buyer. But for the seller, it’s a different matter.
What should you do when you come across a property that’s close to foreclosure? If you’re a homebuyer who’s under this situation then you better read up. Below are some of the things that you have to remember when buying a short sale property.
How will you know that it’s short sale?
If the offer is too good to be true then it’s probably a short sale. Ask directly the home seller if the property is pre-foreclosure.
What are the benefits?
It’s a huge bargain for homebuyers to get a property under a short sale. The property will be cheaper than its original price. Who wouldn’t want a new home that’s cheaper than expected? But then again, all great deals have its loopholes.
What are the loopholes?
The price is right but are the loopholes worth it? We collected some of the dangers of buying a short sale property:
- Unpaid liens: The unpaid debt of the house may be passed to you after you buy the house. Ask for the help of your agent to do research on the land title.
- Poor maintenance: The real condition of the property may not be mentioned of the seller in fear of not getting the amount that they want. What you should do is to double check the property with a valuer.
- Incomplete information: The seller might be keeping secrets that may hurt your finances once you buy the property. Do your research closely and do some background check on the property before signing anything.
- Long closing: The closing may drag on since banks may have a hard time approving this deal.
What is the most important thing that I should remember?
Remember that this is not a DIY project. You have to call on the help of professionals (i.e. the real estate agent, lawyer, and land inspector) to close a short sale. Getting the deal that you want is truly eye catching but traps may be waiting for you at the end when you’re not being rigorous. Do not be afraid to negotiate to get the best price that you want – without regretting it in the end.
Image source: http://www.persquare.com.ph/for-sale/house-lot-central-visayas-cebu-lapu-lapu/2-storey-single-detached-in-lapu-city_117754 – Primary Homes
