Seller and buyer have agreed on a sales price and even the seller lender ready to approve transaction. But the seller has just declared bankruptcy and cannot proceed with the sale until seller go to court in near future. There can be potential risks buyer is taking moving forward.
First step for buyer is to hire a real estate attorney who will check on any liens against the property. If lien on the property is only from the mortgage company, buyer can start working with seller. Buyer should authorize attorney for representation. It is important to make sure buyer get a general warranty deed and the property sale should be the same day as the title search. Be sure buyer attorney is in constant contact with the seller's lender & verify owner's title insurance.
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Still there can be more potential risks in completing transaction. The sale could be held up by the bankruptcy proceedings. Depending on what chapter seller is filing, this could go very quickly, or could take lot of time which is hard to predict. If the offer amount is less than seller owe to lender, this will be considered as short sale. Generally, lender will take up to 90 days to approve a short sale. Such properties are usually sold As Is so make sure offer will compensate buyer for any repairs that need to be made on property. Since owner is in financial distress, he/she has stopped taking care of property. So expect lot of repairs in this transaction.
As long as buyer is consulting real estate attorney, risk will be minimal or not at all. But on positive side, buyer could be getting a great deal, and at the end and may end with a decent amount of equity in new home.
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