A short sale occurs when a homeowner cannot afford mortgage payments and tries to sell his or her property for less than its market value. While buying a short sale condo can result in a great bargain, it can also be a very lengthy and risky process for the buyer. In order to have the best chance of buying a good short sale condo, it is important to do research, work with reputable agents, and be prepared to wait a long while for the sale to close.
One of the first priorities when buying a short sale condo is to be sure that it will be affordable. A condominium at 40% below market rate may be a great deal, but can still be too expensive if a buyer doesn't have the income to afford the payments. In addition, condos often charge fees for community features, such as gyms, swimming pools, and other amenities that come with the condominium. Be certain to calculate condominium fees into monthly payments when determining if a short sale condo is affordable.
Though some people have benefited from the rash of short sales and foreclosures following the global financial crisis of 2007, short sales in the United States have created some rather confusing title issues. Deregulation of the housing industry in the late 20th century allowed lenders to sell mortgages to third party lenders, often leading to extreme confusion about who actually owns what. A person trying to short sell a condo may honestly have no idea if there are multiple liens on the property, or if the mortgage has been sold to another lender. It is worth the time and effort to track down the deed to the property to determine if the lender and homeowner selling it actually have the right to do so. Without this assurance, it is possible to buy a property and then be put into foreclosure by a lender that actually has the deed to the property.
Another key to buying the best short sale condo is to make sure that it is actually a good bargain. People assume that short sales are good bargains, but may not do enough research to ensure that a particular property is truly listed at below market value. Even in a condominium complex where it's easy to verify the price range of other homes, there may be internal damage to the individual unit, such as water or termite damage, that lowers the value of the home. Buyers may want to request an independent home assessment and evaluation before putting forth a formal offer on a short sale condo.
Short sales are notorious for taking a very long time to close. Even if a homeowner puts for the generous, well-financed offer on a condo, it can take several months before the lender decides to accept the offer for a variety of reasons. Buying a short sale condo is probably not the best plan for a person that needs to relocate in a hurry. A buyer who can afford to wait a few months to move may be in a better position to find a good short sale property.