The solution:Do a preliminary title search on the home to determine the extent of any unpaid liens.
Unpaid liens. These can range from contractor liens to a surprise second mortgage, potentially adding tens of thousands of dollars to the cost of the home. Here’s how to handle five common risks when you’re buying a short-sale property.Ĭlick here for more helpful information, also please check out Real Estate Sales from Hell by Bob Boog And, for sellers having a short-sale on your credit report is BETTER than a foreclosure. That’s not to say that there aren’t some great deals to be had with short sales - especially for a first-time buyer who may be looking for a chance to get into a starter home at below-market costs - but it’s important for buyers to know about this. Sometimes the original homeowner has been struggling for so long that the buyer later discovers unforeseen maintenance, financial and legal problems. The seller doesn't have the money to fix the leaky pipes or faulty heater. As a result, maintenance of the home can suffer. Short sales sometimes can take a LOOOONG time to get approved. The result: The homeowner walks away without a credit-killing foreclosure, the creditors get paid, and a buyer gets a sweet deal. Will the bank forgive $140,000 of unpaid debt? Yes! If she qualifies! Let's suppose our homeowner lists for $510,000 and gets an offer for that amount. How a Real Estate Short Sale Actually Works She must list her home with a real estate agent too. She will need to send over her financials such as bank statements, credit report and paystubs. In other words, the homeowner must QUALIFY for the short sale. How? She simply contacts her bank and the bank will send over a "short sale" package. What can she do?Īnswer: The homeowner can do a Short-Sale. It's not her fault the economy has tanked. Two years later, the home is worth only $510,000 but the owner needs to sell it because she has lost her job. Example of a Short SaleĮxample: Homeowner buys a home for $650,000. The homeowner can’t afford to pay those liens in full, and works out a deal with the lien holders that allows for the sale of the home, with the proceeds settling all the debts. A Short Sale DefinedĪ short sale occurs when a homeowner has fallen so far behind on payments that there are liens on the property - most commonly from lenders or tax agencies. But much like foreclosures, they can have hidden problems that can erase or even cost more than the potential savings. A real estate short sale can be a great opportunity for a home buyer to maximize the bang for their buck.
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