5 Questions to Ask Before Buying a Short-sale or Foreclosure Home

If you’re thinking about buying a foreclosed or short sale home, you can probably get a pretty good deal. Everyone loves the idea of a smaller mortgage, but if you don’t do your research, you might up paying hefty fees on top of your mortgage.

What are the property problems?

If a house has been sitting empty for a while--or if the previous owners couldn’t take care of it--there might be issues in everything from the foundation to the plumbing. Get a home inspector who has experience with foreclosures and short sales to come out and look at the property. Make sure you’re there so you can ask questions and figure out which are big issues and which can be fixed once you buy the house.

Will I need to finance repairs?

Once you have a good idea what repairs need to be done, you’ll need to figure out if you’ll need financing for them. Remember, not all projects are DIY, so you might need to factor in the expense of hiring a certified contractor.

How long will it take to close?

Buying a short sale or foreclosed home can take a lot longer than a traditional sale. You should hire a real estate agent with short sale and foreclosure experience--and he’ll be able to give you a better idea of what to expect. Just keep in mind you might need to end up renting if you sell your house right away since it might take a couple months to complete the sale for a short sale or foreclosed sale.

What are the historical issues?

On a short sale, the bank isn’t also required to fill out a Seller’s Property Disclosure Statement. So that means you could be missing out on some pieces of important historical information--like whether or not the home’s on a floodplain-- that can affect your homeowner's insurance.

Are there any liens?

If whoever owns the house now hasn’t been keeping up with basic maintenance, the homeowners association might have a lien on the house. If you don’t find out about and resolve any liens, you might end up on the hook for paying them.

Ready to get to work investigating your potential new home? Fingers crossed everything works out because a short sale or foreclosure can be a great deal, especially if you're looking for your starter home.