Short sales—things to consider before buying.

Yes, it’s true…there are many homes in the Andover and North Andover area listed for sale as “short sales” and yes, purchasing a short sale may be a good opportunity for a home buyer or an investor.  Look for phrases in the sales listing descriptions such as ”subject to bank approval” or “subject to lien-holder approval” or “as-is”. Rarely will you see “short sale”, so it’s best to be armed with some crucial information about short sales before considering buying one.

• In this type of transaction there is an additional party involved besides the buyer and the seller; the bank. The bank must approve the sale, and this can make the time to close much longer than usual. Expect it to take anywhere from four to six weeks perhaps even months.  And once the bank’s approval is granted, they will expect you to be ready to close as soon as possible.
• You will need to pay for your own inspection, and since the sale is “as-is”, this means that no repairs will be done and there will be no closing cost credits for repairs.
• You will also need to pay for your own appraisal. The bank will do their own as well, and have been known to reject the sale based on their appraisal. Also, they may ask the buyer to raise their offer before approving the sale.
• These things are obvious risks to the potential buyer, as you could end up out of your inspection costs.
• Deferred maintenance on the home is a potential risk for the buyer. Consider that since the mortgage payments were not being made, it’s highly likely that the homeowner was not able to afford regular home maintenance.

Fore more information about short sales go to About.com or contact me at RE/MAX Partners in Andover.  I have the training and information to help you navigate your way through your buying process.