When a property is advertised as a short sale, that means the owner owes more on the mortgage than the house is worth and the lender has decided to sell it and accept a potential loss. A lender may agree to a short sale because it takes less time and costs less money than going through the foreclosure process. A short sale also affects a homeowner’s ability to buy another house in the future less than a foreclosure would.
A short sale could be a great deal, or it could be more trouble than it’s worth. If you’re thinking about buying a house in a short sale, be sure to do plenty of research and ask your real estate agent for advice.
Reasons to Buy a House in a Short Sale
Sometimes a short sale is a dream come true. You might be able to get a beautiful house that you would otherwise be unable to afford. There also tends to be less competition for short sales than for homes sold by the owner because many people, particularly first-time buyers, consider traditional transactions less risky.
Potential Problems to Consider
A short sale means the house is being sold as-is. It could have major problems, some of which might not be readily apparent. An owner who was in financial trouble may have neglected important repairs, cut corners, or skipped routine maintenance altogether. Sometimes homeowners are angry about losing their home and intentionally cause damage. If you’re considering buying a house offered in a short sale, don’t even think about skipping an inspection. If you do, you may find that the house you thought was a bargain is actually a money pit.
Despite its name, a short sale may take longer to finalize than a traditional sale. The lender needs to approve the offer, and it may take months for the process to move forward. In the meantime, you might have to pass on another suitable house.
Is a Short Sale a Good Idea?
A house offered in a short sale for a price significantly below market rate can be a steal, provided it’s in good condition. If the asking price is similar to the list prices for other houses, you might be better off buying a house from owners who aren’t struggling financially and who are less likely to have put off maintenance and repairs. If you’re thinking about purchasing a house in a short sale, consider its condition, the asking price, and how it compares to others on the market, and ask your real estate agent for guidance.
