Online House Hunting

While waiting for a bank to decide on a short sale who pays ongoing costs of empty house?

Does the seller pay the mortgage, taxes, utilities on a house with an offer waiting for bank approval? Once the bank approves and accept the short sale offer might there be additional charges if the seller has not been paying mortgage on a home where he no longer lives? If they accept my offer do they often come up with other charges left behind by the former owner?

Public Comments

1. Short sales can be tricky. You should consider going with your own agent, one recommended a friend or family member instead of the one representing the seller.
2. You become responsible for all costs on the property from the moment of completion, not before.
3. The seller is responsible for all costs of maintaining the home, re: they are the legal owner. No you will not be charged, unknowingly, extra costs. That is what a title search is for, to discover any outstanding liens against the property. Be forewarned, short sales and foreclosures can take up to a year to complete
4. If your offer to purchase is not structured properly, you COULD find yourself owing charges. While most closings determine that the sellers (including the lender) pay taxes, etc. to the day of closing, some miss outstanding HOA fees. If your house is involved in a HOA, insure that your contract also indicates that any back HOA fees be paid up to date by the sellers. Past due HOA fees many times do not show up on a title search. As well, insure that the home remains in substantially the same condition as when you viewed same. If this owner retains keys to the house, you MIGHT find it stripped of items of value, such as appliances. Do a final walk through on the morning of closing to insure that all is intact.
5. The owner is responsible for all costs related to the house including mortgage, utilities, insurance, taxes and upkeep until you sign the closing paperwork, whether they live there or not. Once you close you will not be responsible for any past fees the owner did not pay as it was not your responsibility at the time. That's why there's a title search and title insurance to protect you and your mortgage holder. We purchased our house as short sale at the beginning of October after waiting 6 months to get the approval. The house was empty for 3 of those 6 months but the owner was still responsible for all costs related to the house. Although she didn't maintain the yard or cleanliness of the house up to the standard that she should, she did keep all her bills paid with one exception. She hadn't paid the property taxes for the final quarter she was in the home, so at closing we were issued a check for the entire total owed for the property taxes. I don't know if she thought she could get away without paying it but she was required to at the closing table. Since the bill would be sent to us after closing she had to give the money to us so we could bring the bill up to date. We also found that she overpaid the water bill last quarter so we only had to send in a small amount due to the credit. The only "extra" fee we had to pay was covering the cost of the heating oil left in the tank. Originally this wasn't in the plan but it was found later that we did have to pay her or the oil would be pumped out and we would have to have another company fill it. It was just easier to pay for it at the closing table. However, the estimate the seller gave was much higher than the price for oil at the time so she ended up getting $150 less than what she expected. It worked out for both parties though. The best thing you can do is read your sales contract very carefully to make sure you know what to expect and what your rights and obligations are. You can also rely on your buyer's agent (I hope you have your own agent and are not using the seller's agent as that's a conflict of interest) for advice and help understanding your states laws. As for short sales themselves, the two biggest downsides are they can take a very long time to come to completion and you're often buying the house AS-IS, which means the seller and the bank won't make any repairs. However, it's still a good idea to get an inspection done by an inspector you hire so you know what you're getting into before legally buying the house. Inspections are done after the seller's bank approves the short sale and you usually have a short window of time to complete it. Hopefully you had your right to inspections written into your sales contract as well as a clause to back out of the sale if you're unhappy with the inspection report. Also be sure to request a final walkthrough right before closing to make sure the house is as it should be. Ours was 30 minutes before we were scheduled to close. Short sales are stressful but if you love the house then it will be worth it. As I said before, we waited 6 months to get our house and even though it nearly drove us insane we're thrilled we stuck with it. We love our house and know we picked the right one for us. Good luck! I hope you get your house! Brit