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What you need to know about buying a short sale pt 2

August 4, 2010

 

 

One of the most important things to remember when purchasing a home through the short sale process or, "buying a short sale," is that the seller is not allowed to make any money on the sale of their home. To be able to complete the short sale process they forfeit all of the money that they have paid in mortgage payments, and any upgrades that they may have purchased. Because of this, in most of the situations that I have encountered the seller is not willing to do any repairs that may be required in order for a buyer to purchase the home. In one of my recent blog posts, "What you need to know about buying a short sale pt 1" I outlined some others things that is important to know about buying a hsort sale.

 

Often times the short sale home has been unoccupied for many months. This can cause an acceleration of the pace at which the home is deteriorating. The plumbing just sits there, the appliances just sit there, the HVAC system just sits there, the entire house JUST SITS THERE...... UNLIVED IN..... VACANT..... Many times this requires repairs to be done before a loan can be given for the buyer to purchase the home with. I touched on this topic in my blog post, "fha appraisals vs conventional appraisals and what it means to you", and the same goes for VA loans as well. When this happens, more than likely, since the seller is not getting any funds from the sale of the property, the buyer can be stuck with the cost of performing repairs out of their own pocket before they actually purchase the home, just in order to get the loan approved. This can be very costly.

 

One example I can give of this, is a short sale that I am currently representing a buyer in. The FHA appraisal came back and said that the house must have a large amount of rotten wood replaced, and a large portion of the wood that doesn’t need to be replaced has to have a coat of paint put on it, because, if it doesn't get painted, it "will eventually rot", in the words of our appraiser. Now don't get me wrong, the buyer planned on having the entire house painted as soon as he closed. Having to do so prior to close though, puts the buyer in a situation where they are going to have to invest a significant amount of money into the home when they don't actually own it yet. This is especially true when there is still a chance that the transaction might fall through. (As is the situation for all short sales, regardless of what anyone tells you)

 

There are plenty of other examples that I could give you about things that could happen when you are "buying a short sale" but that is for another post.....

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