Bernstein & Feldman, P.A.

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A short sale poses risks for the unwary buyer

Many real estate agents have seen the joy their buyers feel at finally finding the home of their dreams quickly change when they are told the property is a short sale. There are homeowners throughout Maryland who are selling property for less than the amount owed on the mortgage. As in other parts of the country, real estate professionals refer to these types of real estate transactions as short sales.

Declining home values that followed years of homeowners pulling equity out of their properties through mortgage refinancing offered by lenders have resulted in homes being offered for sale at prices that leave the homeowner with the inability to repay their debt. A short sale can be an alternative to foreclosure, but the lien holder must agree to accept less than the full amount that is owed in order for the property to be sold. Although the price of a home sold as a short sale might appear to a bargain, buyers must be wary of what problems these types of real estate transactions might present.

Buyers and real estate brokers should be aware that a homeowner's inability to repay the debt on the property probably means that maintenance and upkeep has no doubt been neglected. Buyers of a short sale should have a professional conduct a home inspection to determine if there are any hidden problems with the home. An inspector might also be able to offer an estimate about the cost of repairs.

Another issue that frequently arises in a short sale is the time it takes from signing of the purchase agreements until the actual closing and the transfer of property title to the buyer. Short sales can take longer to complete because of the fact that the lien holder must consent. Buyers in short sale transactions can benefit from representation by attorneys knowledgeable in real estate law who can describe each step of the process.

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