Purchasing a home on short sale happens when a buyer purchases a home for less than the amount the owner owes on the mortgage. These are usually homes that are facing, or about to face the threat of foreclosure proceedings. In these situations, the lending organization must first give permission for the short sale. The lender will also not receive all of its money back on the sale, but it could be more advantageous than the foreclosure process, which is why banks allow short sales to proceed.
From the homebuyer’s standpoint, a short sale could mean buying a home for a bargain. However, buyers need to beware of what they’re getting into. It is vital to thoroughly evaluate a short sale home for property problems — especially the potential for damage caused by the previous homeowners who may be angry about being forced to leave their home.
Sometimes the owners of a short sale home will damage the property on purpose before leaving it. For example, there have been cases where the previous owners destroyed parts of a home with sledgehammers out of spite.
There is also the chance that a foreclosed or short sale property was vacant for a long time and has suffered from neglect. It’s not uncommon for a short sale or foreclosed property to lay vacant for months and even years. As such, there might be mold, leaks, squatters, filth, termites and thieves affecting the property.
If you’re considering buying a short sale property or foreclosed property in Minnesota, consulting with a real estate lawyer about the purchase before agreeing to the deal is a great place to start. An attorney can help evaluate the property for potential legal issues that could negatively affect you later on down the road.
Source: Bankrate.com, “5 common errors when buying a short-sale house,” Lora Shinn, accessed Jan. 27, 2017