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To Buy or Not To Buy

Positives and Negatives on Buying a Short Sale for Real Estate Investors

Posted On: Monday, May 2, 2016



Like most things in Real Estate, it is important to do some research before buying into a new investment.
A short sale is when the original owner of a property no longer has the sufficient funds to keep up with owning the home. The home is then taken over by a Real Estate agent. Short sale properties are generally sold for very low prices which is the main reason why investors are attracted to these purchases. Even if the price is right, it is still important to weigh the positives and negatives of any purchase including short sales. Lucky for you, this article will detail some of the main pros and cons on buying a short sale property. Keep these in mind when investing in your next short sale property.


Things to Consider and Avoid

When investing in a short sale property, investors often forget to take the condition of the house into consideration. If the owner of the property did not have enough income to keep up with the mortgage, they probably did not keep up with much else either. Keeping this in mind, make sure to go over everything that needs to be repaired or replaced. The property’s price tag may lure you in, but if the amount you’ll spend on fixing it is almost as much as the money you save from buying the short sale, it is not a good investment.

Know what you want to do with the property once you buy it. Whether you are investing in this property for your house or to flip and resell, always remember to have a vision of what you want it to look like in the future. Buyers normally make house plans for new houses, so why wouldn’t they for short sales? Well, that amazing price entices them just like when it comes to forgetting about inspecting the property damage. Remember that any house can be a dud and that you might finally get into the home and realize that there is not much you can do with it. Like a wall you want to be knocked out, for example, that has a supporting beam, or an addition that the property might not be able to support.

If you are looking for a fast transaction than avoid a short sale purchase. An offer may be approved by the owner quickly but you still need the banks approval. Short sales tend to be long and frustrating. There are many things that can go wrong. If you lack patience than a short sale may not be right for you. These are the things you need to plan ahead for.

Advantages

Needless to say, the price of short sale homes are its biggest advantage. If you’ve done your homework and the property truly works for you, buy it, you will not be able to find such a good price in the regular market. Just remember, like any investment purchase, never allow emotions to cloud your judgement. All investments should be treated equally with the same amount of research and due diligence. Before purchasing a short sale, ask yourself does it meet your criteria, and what exit strategies will you have in place. If the price is right and your plans can be realized, a short sale home is the right buy for you!


5 responses to “To Buy or Not To Buy”

  1. Thomas says:

    I have always wondered about the short sale. This is very good information! Thank you for posting it!

  2. Ricky Hensler says:

    This is something that I considered, but my financial adviser kept me from doing. Good luck to those that try it, I am sure there are situations out there that will end good.

  3. Mark T. says:

    I have been reading more about short sales and it would appear that they are a good price, but the downfalls are always costing the new owner more money. You make some good points here.

  4. Lucy R. says:

    short sale? Not going to happen, love the prices, but I am not going to fall into a trap that could damage me forever.

  5. Nancy says:

    I have been down this road and even though I came out on the good side, barely, I will never do it again. It was not worth it for me.

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