Buying a short sale home offers buyers an opportunity to save big on the purchase of a house. However, if you don’t do your due diligence, you may end up paying more out of pocket expenses than you plan. This guide can help you avoid some of the common pitfalls associated with this type of real estate purchase.

4 Factors to Know Before Pursuing a Short Sale

1. Hiring an Attorney Is Wise

Even if you’re working with a real estate agent, you will want to consult a lawyer experienced in handling these types of real estate transactions. With a short sale, there will be more legal complexities and having someone experienced to help you manage these issues will save you time and money. Hiring an attorney isn’t mandatory, but doing so will help you protect your interests.

2. The House Will Not Be Updated

In a typical home purchase, the seller and buyer negotiate for concessions. This can include asking the seller to make certain repairs or take money off of the purchase price to compensate for the costs of these repairs. In a short sale, the bank is the seller and, since they have had to foreclose on the home, they’re already losing money. This makes it unlikely that they will make any repairs or offer to reduce the price any further.

3. Conduct a Thorough Title Search 

A title search is especially important with a foreclosed home, since there may be unknown liens against the property. This is common in cases when the previous owner took out a second mortgage prior to undergoing the foreclosure process. In this case, you will have to make an offer that leaves something for both lenders. If the primary lender is owed $160,000, you will have to make an offer that is $3,000 to $6,000 over that amount to ensure the second lender also receives a payment. Your title search should also make sure the foreclosure notice has been filed and should identify the previous owners.

4. The Lender Is Not Obligated to Accept Your Offer

It’s important to note that the lender doesn’t have to accept your offer, which makes it more important to submit a reasonable proposal. The lender may have to submit the offer to a lending committee for review, which means getting a response can take several months. There will also be no way for you to contact the lender because the assigned listing agent will be the only one with the lender’s contact information. 

As this overview suggests, there are many legal concerns that can affect a short sale, which is why working with an experienced attorney will be beneficial. Bernardini Law P.C. in North Andover, MA, and has been serving Essex County and the surrounding communities for several years. They will provide personal and dedicated legal services that can help your real estate closing proceed smoothly. To schedule a consultation, call (978) 794-5525 or visit their website to browse their services.