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What You Need to Know When Buying a Home Through a Short Sale

Posted on in Real Estate

Lake County real estate attorneyIf you are planning to buy a home, you will be looking for the best ways to find a property that meets your needs and that you can afford. In some cases, sellers may be looking to complete a short sale in which they will sell their home for less than the total amount owed on their mortgage. While this type of arrangement may provide some savings, buyers should be aware of the potential issues that may arise during this type of transaction, as well as the unexpected costs or delays they may encounter.

3 Potential Drawbacks of Buying a Short Sale Home

While you may be able to save some money when purchasing a home sold through a short sale, this does not mean that you will pay less than the property is worth. During a short sale, a lender will usually perform an appraisal of the property, and the purchase price of the home will be based on the fair market value as compared to other homes in the area. You should also be aware of the following issues that may arise during a short sale:

  • Longer and more complicated closing process - It can often take six months or more to receive approval for a short sale from the current owner’s mortgage lender and other creditors who may have an interest in the property. In some cases, lenders may reject an offer, or they may make a counteroffer that would require you to pay a higher purchase price. The home closing process for short sales will often be more complicated, adding additional time before the transaction can be completed.

  • Unexpected costs - The closing costs may be higher in a short sale, especially if the seller will not be paying some of the costs that would typically be covered in a residential real estate transaction. If there are multiple liens on a home, such as a second mortgage or a mechanic’s lien, you may be required to pay fees to have these liens released so the transaction can proceed.

  • Home sold in “as is” condition - Normally, buyers can perform a home inspection and ask for defects to be repaired. However, in a short sale, a seller may not be willing or able to pay for any repairs. In addition to addressing known issues, you may also discover damage to the home or other defects that will need to be repaired after you complete the transaction and take possession of the property.

Contact Our Waukegan Short Sale Attorneys

While purchasing a home through a short sale may seem like a good deal, you should be sure to understand the potential drawbacks of this type of transaction. At Newland and Newland, LLP, our Round Lake real estate lawyers can provide you with representation during your residential real estate transaction, and we will make sure your rights are protected while helping you address any issues that may arise. Contact our office today at 847-549-0000 to arrange a free consultation and get the legal help you need.

 

Sources:

https://www.thebalance.com/short-sales-are-no-bargain-for-buyers-1798170

https://www.quickenloans.com/learn/short-sale

https://www.moneyunder30.com/buying-a-short-sale

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