Buying a short-sale home is appealing for one big reason – you're probably going to get a smoking deal because the bank has agreed to sell the house for less than what the owner owes. But before you jump in, take off those rose-colored glasses and make sure you're not making any of these big buyer mistakes.
Running Out of Time
A short-sale takes a lot longer to close than a regular sale because the seller's lender is not going to want to take a loss on the loan. Banks can also be slow to respond because of the sheer volume of short-sales and foreclosures coming in. Buyers need to anticipate this, so give yourself enough time to get through the process.
Downplaying Problems with the Property
Short-sale homes can have a lot of issues. It's quite common for homeowners on the verge of foreclosure to destroy parts of the home out of frustration before they leave. Other properties may be sitting empty, which can create problems like termites, leaks, and mold. Potential buyers need to make realistic budgets and factor them into the total price. You could end up needing a loan later on to cover the costs.
Blowing Off the Inspection
While you may be buying the home "as is," you don't want to skip the home inspection or shorten the inspection period. You need this time to call in a reputable inspector and perhaps specialists like structural engineers, mold experts, and others. Use this time wisely to understand what you're buying and to get estimates for repairs.
Blinded by Love
Whether it's a charming home or you're swayed by the rock-bottom price, ask yourself some important questions: Could you afford to rent the property out for less than or equal to the mortgage payments? If the home value drops (or continues to drop), will you still feel good about buying it today? What will be the true cost
Skipping Important Disclosures
The bank may try to sell you the property without disclosures, which is legal and insurance information that could impact your decision. Examples include renovations done without permits and location in a flood plain. Do your own research because you don't want to get cited by the city or face some other unpleasant surprise later.