Short Sales, Foreclosures, Owner Sales

Short Sales, Foreclosures and Homeowner Sales: A Guide to How They’re Different If you’re a buyer in today’s market, chances are it’s a li7le confusing with so many different homes for sale. Some are foreclosures, other’s are short sales, and then there are the tradi=onal home sales either by the owner or a realtor the owner is paying for. So the ques=on becomes: how are they different and what should you expect? To help with the ques=ons, here’s a quick guide you can review when deciding which kinds of lis=ngs you should take a look at. Buying a Home That’s a Short Sale Let’s start with short sales. A short sale is basically when the owner has to sell his or her home for less than they owe. They have to do this usually because their house is now worth less than their original purchase price, so that even aer this sale – they will be short on repaying their loan. But then who will make up the difference – you might ask. Generally the bank will have to agree to this new sale price, and agree to absorb some of the loss in selling this property. Of course the situaon is not ideal for the bank or the seller, as they both have to lose money in this situaon, but it beats foreclosing on the house which hurts both the buyer and bank more, and creates a perfect buyer’s market. So the important thing is: what does all this have to do with you as the buyer? Well, in general, you can expect short sales to be in pre7y good condi=on because the owner will want to sell it for as high of a price as possible. These homes may not be in as good of condi=on as those that are just normal for sale by owners because to do a short sale, the owner usually had to show financial hardship such as a job loss. So in this case, you may see some neglected repairs and home improvements due to financial problems. Short sales (unless pre-approved) will also take longer than any other type of sale usually. This is because the owner sets a price, and once they have found a buyer, they must submit this short sale price to the bank for approval. The bank can then take months to decide whether they want to take a loss on this home, and what kind of agreement they want to make with the owner. So, if you’re bidding on a short sale, be prepared to wait six months to hear back on whether or not you got the house. However, having said that, short sales can be fantas=c bargains because most home buyers don’t want to wait that long. Buying a Foreclosure If you already own a home and are looking for an investment property, or are good at making some general repairs around the house, chances are foreclosures are a good op=on for you. Foreclosures oGen have signs of damage and neglect as the bank has taken over and sealed up the house. They also usually sell for much less than a comparable home that’s not a foreclosure because of their condi=on. Homeowners who have been told they are being foreclosed on can naturally feel that there is no point to taking care of the home any longer, which is why the condi=ons are oGen substan=ally different than a non-foreclosed home for sale. So what should you watch out for in a foreclosed home? Be prepared to see some structural damage like holes in the wall, mold, and even water damage in the basement. If you’re good at fixing up houses, this is definitely a good opportunity, but just be prepared many of these homes are not move-in-ready. Buying a Home From the Owner If you don’t want to deal with the =me hassles of short sales, or the ques=onable condi=ons of foreclosures, chances are you want a tradi=onal home for sale by owner or a real estate agent the owner hired. These homes are usually move-in-ready, but have a slightly higher cost than say foreclosures or short sales. Of course in today’s buyer’s market, you’re s=ll geng the home for probably 30% to 40% off its original value just 5-6 years ago at the height of the housing bubble. So what should you watch out for in just typical house shopping? First of all, don’t be deceived by great paint colors or decor. Try to focus on structural factors that are expensive to fix like how old the roof is. Check the basement for the condi=on of the furnace and water heater, and look at the windows to see if they’re newer and energy efficient. Lastly, don’t forget to enjoy the hunt for a perfect house. Buying a home is not only financially savvy in this market, but also fun and exci=ng, so enjoy the search!.

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