Buying a Home ? Short Sale Vs. Foreclosure
With over half of all homes for sale being either a foreclosure or short sale it is imperitive that as a buyer in this market you know the differences in purchasing a short sale vs. a foreclosure. A foreclosure is a home that is currently owned by a bank, who is selling the home they foreclosed on to regain some of their losses. In most cases a foreclosure also known as abank owned home can have a contract for sale and purchased approved within 30 days. What this means for you as a buyer is that you will be able to go from contract to close on your new home in 30-60 days.
On the flip side a property for sale that is labeled as a short sale is still owned by the original owner. The bank has not gone through the legal process of repossesing the home. In some cases the homeowner is not even behind on their mortgage payments. However the homeowner may have purchased the home and owe significantly more on it than is current market value. In cases such as this if the homeowner owes $100,000 but the current market value of a home is $50,000 the homeowner will have to have approval from their lender to accept less than the payoff for a new buyer to purchase the home. In this case the homeowner is selling the home short of what he owes on it, thus the name "Short Sale". In these cases a buyer may have to be very patient as it can take anywhere from 30-120 days for the bank to approve the loss. Once it is approved they buyer will be able to move forward to closing and financing can take anywhere from 30-45 days. This process is lengthy and can be very frustrating.
Being informed with the process is empowering. Which can be a stress reliever through the lengthy process. Here at the Realty Factor our core belief is in educating our clients on the purchase process. If you have any questions on the purchase process don't hesistate to contact a Realty Factor Agent.