Stay Away From Short Sale?
Is buying a short sale house a good idea, or are there too many problems associated with it?
QUESTION: Joshua found a condo to buy, but it’s a short sale house. Is this a good deal, or should he stay away from it?
ANSWER: A short sale can be a good deal, but not necessarily. It’s where people owe more money on the house than it’s worth, and the mortgage company agrees to accept less. The frustration for a buyer purchasing a short sale is that it takes time for the mortgage company to consider and approve it for what you bid.
If you’re trying to buy a $300,000 condo for $250,000, the mortgage company has to decide if that’s what they will take. It’s not necessarily a good deal. For example, you could buy a foreclosure property, but foreclosure isn’t always a good deal. You could pay too much for an old, ratty house that’s torn all to pieces. A foreclosure doesn’t necessarily mean it’s a bargain, so you have to know values in the area and do some research with your real estate agent and know what the values are.
If you’re going to go through the hassle of fixing up a house, you want a bargain.