I’ve been showing short sales listings lately. I have a client who thinks theyre the way to go. A good deal. Bottom fishing. Guess what? They may not be all you think they are. You may find that you’ll end up paying past due taxes. If Home Owner Association dues are past due the association can place a lien against the property and all liens have to be cleared in order to have a clear title for a purchase. K’ching, K’ching, K’ching.
If the property you’re thinking about buying in a short sale is a condo, caveat emptier. If there are a lot of defaulting mortgages in the complex the HOA may not be getting all of the monthly operating expenses they require each month. The HOA may find it needs to raise monthly fees to survive. K’ching.
When a property changes hands the county tax collector gets paid. In fact, taxes rank higher in the ‘must pay’ list than the mortgage does. Its likely that taxes are going to be in arrears by the same person defaulting on their loans, and HOA dues. If you want to buy that short sale property you will have to pay those past due taxes and HOA dues because the seller has no money. Is this still sounding like a good deal to you?
You’re much better off waiting until the property is taken back by the lender and put back on the market as a Bank Owned Property. In California the seller must pay all back taxes prior to close of escrow. The seller must clear all liens against the property, too. If the seller is a bank or mortgage company, they’re on the hook for that money and it can be sizable. You, dear buyer, get a property that is generally priced below comps in the area. That is a good buy.