Is Buying A Home Through A Short Sale Ever a Good Idea?
Mar 3, 2017
2 min read
In today's real estate market, home prices are on the rise with generally low inventory and a lot of competition. Here on the North Carolina coast, there are a lot of quality, new homes popping up like daisies, but perhaps you are considering investing in something with higher equity such as a foreclosure or short sale. With the potential for a big payoff however, you can expect some real challenges throughout the buying process. Is buying a short sale ever a good idea?
210 Oyster Lane, photo courtesy of Christina Pitz & Associates
If you are like me, you hear the word "short sale" and think, this is going to be a really quick sale that gives me a ton of bang for my buck! Not quite.
A short sale is defined as follows in the recent article published by U.S. News: "A short sale occurs when there is more debt on a home than the property itself is worth. If the property owner is considered to have substantial hardship that the debt cannot be repaid in full, the lender will agree to take less than the debt amount and forgive the borrower without foreclosure proceedings."
One of the biggest pitfalls to a short sale is time. If you want to move into a new home anytime soon, a short sale is not the way to go. Sometimes buyers can be held up for up to a year before they can close on a short sale.
Another factor to consider is cash, cash and more cash. It is very difficult to get financing on a short sale, and you may have to not only pay a large down payment but also pay for liens or multiple liens on the property out of pocket.
While there are still a hand full of short sales on the market that can pay off and put good equity in your portfolio, they are a big hassle that can leave you with remorse. Bottom line, do lots of research before jumping the gun to purchase a short sale.
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