How Short Sales and Foreclosures Differ

Though short sales and foreclosures are thankfully not nearly as common as they were during the Great Recession, it’s still important to understand what these processes are and how they differ from one another. Simply put, a short sale is a real estate transaction in which a homeowner will sell their property to a buyer for an amount that, while not quite the full remaining value of their current loan balance, is found to be acceptable compensation by the bank. Such sales are a last resort for homeowners so far behind on their mortgage payments that it has become impossible to keep up. So, while they aren’t particularly desirable, short sales are preferable to foreclosure. This is because, in the case of a foreclosure, the bank has the homeowner evicted and takes over the sale of their property themselves. Instead of putting it up on the market, the property will be sold at auction with no contingencies. People looking for a cheap deal are often attracted to short sale and foreclosure properties, but there are a few things to keep in mind before pursuing such a purchase. First, buying a short sale home can take a very long time, while purchasing a foreclosure property is much faster. However, expediency isn’t everything. Those buying short sale homes have the benefit of going through the inspection process, as they would for any other home purchase. This is not the case when buying a foreclosure property when the entire purchase is made in cash, sight unseen. The bottom line is that purchasing a distressed property can be a smart move for savvy buyers but is not a decision one should take lightly.

If you have a fun vision in mind for your home, by all means go for it.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.