Potential Costs when buying a Short Sale

By
Real Estate Agent with Keller Williams Realty

Here is a good article from the Wall Street Journal on potential costs that may occur when buying a short sale.

HIDDEN COSTS OF SHORT SALE BARGAINS

There are some excellent points regarding costs to be aware of brought up in this article.

When buying a short sale you (or your agent) need to interview the listing agent, here are some questions:

How many short sales have you successfully negotiated over the last 12 months?  Make sure the listing agent is experienced with short sales.

How many liens are there on the property?  If there is is more than one lender the short sale process can take longer and you may be asked to contribute some money to satisfy the second lender.

Have you done a title search and are there any additional liens on the property?  Some potential liens thay the seller's lender may be willing or not willing to pay are utility liens, IRS tax liens, HOA liens, etc.  When submitting a short sale offer to the seller's lender for approval it is CRUCIAL to have all these costs accounted for upfront.  If the short sale is approved and then there are additional liens uncovered that need to be paid it can be very difficult and time consuming to get the short sale approval updated with the additional costs being paid for by the seller's lender.

If there are condo or HOA fees, are they current?  Some lenders will only pay 3-6 months of back HOA/Condo fees.  Anything over that would have to be paid by the seller or buyer and in most cases the seller will not pay them.

When buying a short sale you also need to keep in mind that the sellers are in distress and might not be taking care of the house.  A vacant house that has been empty for a while might have some unexpected problems.  Make sure you hire a qualified home inspector and be aware that some of these issues may cause problems with your financing.

If you have any questions or want more information regarding short sales feel free to contact me.

Steve Capen

Steve Capen & Associates


Keller Williams St. Pete Realty

Cell - 727-348-2211


www.stevecapen.com


www.pinellascountyshortsales.com


 

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Rainer
245,118
Shannon Coe
Allison James Estates and Homes - Loomis, CA
916-741-1664, Lincoln, Rocklin, Loomis, Roseville

Good Information. I wish the appraisers would take that information when appraising traditional sales.

Shannon Coe Realtor #01489731

925-997-5758

WR Properties Brentwood CA

http://www.ShannonCoe.com

 

November 29, 2010 10:24 AM #1
Rainer
20,330
James Brennan
Brenson Realty, Inc. - Temecula, CA
Realtor, Real Estate, Home Value - Temecula

Steve great post...all good information and very true.  In my market of Southern California the lenders are not paying any back HOA dues and the buyer is usually having to bring in $2k-5k to satisfy the 2nd TD.  Have a great day.

November 29, 2010 10:25 AM #2
Rainer
29,351
Jen Edwards
RE/MAX Unlimited - Ponte Vedra Beach, FL
Broker Associate

Yes, the hidden fees can rack up with the financing due to the property conditions. You have to the school the other agent often as to the pitfalls as well. 

November 29, 2010 10:27 AM #3
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Steve Capen

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