Renting Naples Short Sale Condo

Today’s question from the email bag come from Michelle – “I am interested in renting a condo, however was a bit put off when the broker explained that the unit was in short sale but the lease would not be affected. It’s a great deal but does not sound too good to be true, I’ve heard horror stories in regards to short sales and don’t want to end being kicked out before the lease is up. Do you think it would be risky to go forward in renting this?”

There are some items which you need to research before making your final decision for renting the condo.
1) What does the actual leasing agreement say in regards to if the condo is sold?
2) Where will your security deposit and if required, your last month’s rent be held? Escrow or trust account? Or with the landlord?
3) What stage of the foreclosure process is the property in? If there a final judgment has been issued by the court – what is the auction date?
4) You should be fully be prepared to live in a fish bowl – you will have to be willing to have the condo shown. If you do not allow to be shown – then it could go into foreclosure.
5) What is the success rate of a property which is a potential short sale of actually being closed or sold? The success rate, expressed as a percentage, does vary from local area to local area.
6) How many short sales has the listing real estate agent listed and what percentage of them have succeeded in being closed or sold? Compare this percentage to the local area percentage to get some idea of the chances the property will be sold.
7) How many lien holders have liens against the property? With some condos at a minimum there will be first mortgage and the condominium association holding liens. The greater the number of lien holders, in most cases the less likely the property will be closed or sold. I have seen some condos having as many as 7 liens.

In order to say if it would be risky, the above questions need to be answered. Once you have obtained the answers you will be in a much better position to determine for yourself how risky the rental would be.

Glenn Ginsburg and A Delta Realty is providing this answer for informational purposes only and does not constitute any legal, accounting or tax advice. You are advised to consult an appropriate professional for legal, accounting and tax advice.