Don't Waste Your Money: Understanding 'short sale' home buying - News, Weather, Sports, Toledo, OH

Don't Waste Your Money: Understanding 'short sale' home buying

(Toledo News Now) - We're finally hearing reports that the housing market may have turned. Prices are inching up. Sales are starting to improve.
So this could be a great time to snag a bargain home, especially one sold at distressed pricing. Only problem is it's not always so easy, as one Ohio homebuyer found out.

Fell in Love...But

David Schucter fell in love with a traditional, three-bedroom house, with solid woodwork everywhere.
"It's incredibly valuable. You don't find this in newer homes anymore," said Schucter. 

Best of all, it was a "short sale." At just $65,000, it was almost half the price of other homes in the area.

"This was just a great value home. Three bedrooms, two baths, everything we were looking for as a future family," Schucter explained.

Short Sale Risks

In a short sale, the owner unloads the house for much less than it's worth, just to get out of an underwater mortgage. But Schucter soon learned of the drawbacks.

"The bank took our initial offer and raised it several thousand dollars. They also said we would have to pay any closing costs, back taxes, and any liens on the property," said Schucter. 

So he agreed, in writing, to all the bank's demands, but said after weeks of waiting, the bank shut him out.

"They gave us a counter offer, and we said we accepted their counter offer," Schucter said. "But that's the last we actually heard from them."

Bankrate lists some of the downsides of buying a short sale: 

-There's an extended length of time to close, sometimes six months or longer, due to legal issues. 
- The house is SOLD "as is," with no warranty. 
- You are responsible for all unpaid water and other bills, back taxes, and liens from contractors or towns.
-It may be neglected and need major repairs. 
-Cash talks, which is what happened here, according to the listing realtor.    

The realtor said the home had several offers, and the bank, representing the seller, ultimately went with a cash offer.

The bank would not comment on the case, only saying it would "re-examine" why Schucter was denied.

All Schucter can do is think about what could have been.
"The term 'short sale' is one of those ironic terms where it's not short at all," Schucter said.    
Advice to Buyers

If you are trying to purchase a short sale or foreclosed property, which is similar, you want the biggest down payment possible.

You also may want to speak to a lawyer, or at least have one in your back pocket. They may be able to ask the right questions and get the wheels moving if the bank suddenly gets cold feet.

As always, don't waste your money.

Copyright 2012 Toledo News Now. All rights reserved.
Powered by Frankly