Buying a short sale or foreclosure may be tempting if you’re in the market for a new home. After all, the low prices are very attractive. And you can get a great “deal” if it works out. But that’s a big IF. There are a lot of challenges, frustrations and difficulties that can occur during the buying process.
Landon Homes, one of the most respected and successful home builders in Dallas, has put together a list of 10 reasons why you should think twice about buying this type of home:
- Lengthy Buying Process. The bank has to approve the sale and many of them are backlogged 6 – 9 months on approvals. In addition, some lenders can renegotiate the terms of a short sale at the last minute.
- “As Is” Condition. You will be required to take the property “as is.” If no one is taking care of the home, it can go downhill fast and sustain damage.
- Costly Repairs Needed. Foreclosure homes are often gutted by the previous owner and can have serious damage, requiring additional costs for repair.
- Need for Temporary Housing. During the waiting process for approval, the buyer may have to find alternate or temporary housing if the buyer’s home has already sold or rented.
- No Guaranteed Closing. Multiple buyers may compete for one short sale and there is no guarantee you won’t get outbid. Plus, a lender may decide to foreclose on a short sale and put it up for auction even after an offer has been made.
- Title Problems. It may be difficult to get a clear title, since it could be tagged with judgments for an unpaid second mortgage or home improvement loan. The judgments could also include late fees and other fines.
- Evictions. As a buyer, you have to determine if the homeowner or tenants are out of the property or double-check to see if the homeowner still has personal property, like furniture on the premises.
- Pay Extra Commission. Lenders may want to pay reduced commissions to real estate agents involved in the transaction. If you agreed to pay your agent a certain percentage under a buyer broker agreement, you could be liable for the difference between what the lender will pay and what your contract stipulates.
- Pay Extra Costs. If you want specific inspections performed, you will probably have to pay for them yourself. You may also have to pay standard seller closing costs such as transfer taxes because some lenders will refuse to pay them.
- Sellers Disappear! Sellers who have little to lose and feel hopeless about their situation have been known to disappear – so the sale cannot be completed. If the buyer’s deposit is in escrow, it can be tough to get it back. There is a process, but it takes time and can be very frustrating.
All new Landon homes come with a clean title, are fully warranted, and any small repairs can be handled immediately. In addition, the energy-saving features in a Landon home enable you to save money on utility costs compared to comparable homes in the area. For more information, visit LandonHomesUSA.com or call 214-707-0347.