Short Sales
Short Sales – When the Seller Is Simply Too Anxious
By Buyincomeproperty.com
Nov 7, 2005, 20:14

There are many times when short sales make sense. When lenders are continuously losing money because a house is sitting vacant or when there’s a push to liquidate the property as soon as possible. But if the seller seems overly anxious, you might need to take a step back and take a more careful look.

Short sales are the practice of selling a particular piece of property short of the value of that property. Most agree that the “value” in this case refers to the market value, or appraised value. Sometimes, short sales even come in below what’s actually owed against the property.

Short sales are not at all uncommon in several situations. Lender foreclosures are a common short sales situation, as are divorces. But sometimes, a little digging will give you some important information.

Consider the case a few years ago of the luxury home and the new owners who were constantly fighting bronchial health problems. It turned out that the home had mold. Not everyone is allergic to this particular mold, but the new owners – as luck would have it – were among those who are allergic. Enter the short sale.

These owners couldn’t live in the home but had put enough down that they were able to take a loss on the house in order to get out of the mortgage and purchase something else. All in all, the short sale in this case was cheaper than continuing to live in a hotel. While this case was advertised sufficiently that the owners had no choice about disclosure, many such issues may very well escape public scrutiny. While the owners have a moral and legal obligation to disclose such problems, the burden of proving that they knew will fall to the new owners – the ones who thought they were getting an awesome deal from this particular short sale.

Most people will make an offer on a house, then enter into the professional appraisal and home inspection aspects of acquiring a loan. In the case of a short sale, you may feel the deal being offered is simply too good to pass up, and that leaving it on the table for a few extra days will mean someone else will snatch it up. You may offer earnest money on the short sale with wording in the contract that indicates the offer is only good if home inspectors and appraisers don’t find anything that significantly detracts from the value of the house. Paying for those services before you’re actually at the loan stage on this short sale may very well save you a lot of money in the long run.

Finding short sales is fairly common in the case of divorce when warring spouses and the courts are in a hurry to sell property. You’ll also find short sales when the homeowner dies and there are no children in the area who want physical possession of the property. A short sale may be preferable to overseeing the property from a distance.

But before you take on a short sale property, be sure that you aren’t dealing with something that could seriously impact the value of the property. Mold is just one example, but there could be termite damage (that wouldn’t show from a general inspection) or major repairs that are not evident. You may be in an area prone to high water or there may be problems with septic tanks in the neighborhood. Finding out the reasons behind short sales – all the reasons – will insure that you’re getting a good deal rather than being taken by an overanxious seller.