Five Mistakes of Short Sale Buying

Now there are plenty of homes and other real estate properties available on short sale and foreclosure. This is the best time to buy such properties at a bargain price. But you have to ensure that you are not purchasing problems along with these discount-priced pieces of real estate. There are several possible pitfalls when you embark upon such a venture. Five common mistakes committed by the buyer are explained below.  

Home inspection. Home inspection before deciding to buy any piece of property. The offers for short sale may be on the “as is” condition, mostly. Still a pre-purchase inspection is necessary to assess the cost of repairs. There may be cases where big discounts are offered if inspection is skipped. It will be very foolish to accept such offers. In most cases of mortgage payment default the home owner neglects the property after the stoppage of payment. The plumbing system, electrical wiring and the heating system may require major repairs. Leakage and termite infection are other possible damages. Inspection by an experienced home inspector is necessary.

Don’t be fooled by the low price. If the lender offers a very low price do not jump for it. Take your time and try to find out the real reason behind an unusually low price. When the lender offers to sell at a loss there may be reasons for it. There may damages, not apparent, like cracked foundation. So be extra careful if the offer is more than 10% below the market value. : 

Property problems. Foreclosure properties, especially the unoccupied ones, may be in poor condition. They might have been uncared for, for a long time. The owner may take out the frustration of losing his savings and leaving his home by damaging the house. The owner may try to strip the home of its fittings and damage the floor and walls. You have to know whether the building is made of defective materials. Do not expect the seller to disclose such information.  

Information on insurance and legal status. Information on the likely damages in case of natural disaster like flood must be obtained beforehand. If the building is in a flood zone the insurance cost may be much higher. Either be prepared to pay the higher insurance premium or avoid buying it. Remember, reselling is difficult if the building is in a dangerous zone. Also make sure that no unauthorized renovations are made on the building.  

Be prepared to wait. Short sales and foreclosures are time consuming procedures. Do not expect to do it in a hurry or try to hasten the process. The process must be allowed to take its time and you also must take every possible care while taking every step. Trying to push through in a hurry may cost you dearly.  

When you go for a short sale property remember that you are in a buyer’s market and you are not under any obligation to buy a particular property. Make the search and zero in on one that gives the best value for your money and ensure that no problem, legal or financial, comes along with it.  

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