The Short Sale Process: Common Buyer Mistakes

Even as the economy recovers and Florida’s housing market continues to improve, there are many foreclosures and short sales still on the market. This presents a prime opportunity for real estate investors to build their business and profit margins, but it also presents a wealth of dangers to the unwary. Here are several common short sale mistakes that buyers make, which can cost a lot of money and devastate an otherwise promising investment.

Overlooking Property Issues

Foreclosure properties can come with a host of problems, including mold, leaks, pest infestation, theft of copper or building materials, damage from prior owners and even squatters that can be difficult to eject.
Even if there aren’t any of the above problems present, the homeowner who cannot afford mortgage payments also cannot afford updates and upgrades. Make sure that you can afford the possibly expensive repairs you might have to undertake.

Skipping Home Inspections

Many investors advertise that there is no need for home inspections for them to buy the home. While you may not plan on asking the homeowner to make upgrades, you should not skip a home inspection. This process will tell you all of the issues you will need to address to get the house in basic, livable shape before you start upgrading for resale. You could find that there are hidden problems in the home that can leave you financially out in the cold.

Insurance and Legal Issues

Understand all of the legal and insurance issues that come with your property. If the home is in a flood zone, it can cost you thousands of dollars a year and interfere with resale. If you do not have adequate title insurance, you could find yourself responsible for prior liens and judgements on the property.
If your repairs and upgrades are not up to code or you did not secure proper legal building permits, you will face problems selling the property, and you could face expensive citations from the city.

Going for a Quick Close

Another issue some investors face is that which comes with promising a quick close. In some cases — especially in this day and age — the bank will not want to agree to the short sale and a lot of negotiation and back and forth could result. This can create long delays in closing times while all of the issues get resolved.

Falling in Love with the Home

Never fall so in love with a property that you convince yourself that a bad deal is a great one. What will your mortgage payments be? Could you rent it for more than this, or could you afford to rent it for less? If the home value depreciates substantially, will you still love it? Above all, how much is going to cost you to repair and update the house for sale?
For more information on title insurance or avoiding common short sale mistakes, email us at [email protected] or call (305) 901-5628 today.