There is a common phrase we often hear throughout life: “If a deal sounds too good to be true, it probably is.” While of course there are always exceptions to be made regarding any deal, it is still often the case. Take the “short sale,” for example.
A “short sale” occurs when a lender is willing to sell a home as is, for less than the amount owed. This often occurs when the value of the house or property has recently dropped. If you are considering a short sale, there are still some rules that you should follow to avoid being on the wrong end of the deal.
Do not ignore property problems. This could include structural or safety issues. This could also include leaks, mold squatters or thieves, or even termites in the home. Tied to this is a reminder to not skip a home inspection. Renovation costs should always play a role in your decision making. It is also important to not overlook insurance or legal information. This could include whether the home is located in a flood zone or if renovations are being made without the proper permits. It is also not recommended to let your emotions get the best of you. Think like an investor. Can the home be profitable if sold? If it loses 20 percent value, will it still be a good investment for you? How much more will you need to invest in the home to make it habitable? These are all questions that should be taken into consideration.
There are potential risks involved in any real estate sale. Recognizing the potential risks before you sign off on a sale could wind up saving you significant money and time if there are problems that were not identified initially. You owe it to yourself to follow all the necessary steps and proceed with caution in order to avoid finding yourself in such situations.
Source: Bankrate, “5 common errors when buying a short-sale house,” Lora Shinn, June 12, 2017