Foreclosures and Short Sales Explained

Foreclosures and Short Sales Explained

FORECLOSURES AND SHORT SALES

Foreclosure: A foreclosure, also known as REO (REAL ESTATE OWNED) is a property that a bank has repossessed and now owns. Foreclosure properties are usually assigned to a real estate agent through a third party or "asset manager" within the bank.

 

Short Sale: A short sale is a process in which a homeowner sells the property for less than the amount that they owe the bank.  Many times a short sale is also called a preforeclosure because the bank has started foreclosure proceedings but has yet to repossess the property. When dealing with a short sale, the "seller" is the property owner and not the "bank"  

 

READ "HOW TO MAKE WINNING OFFERS ON DISTRESSED PROPERTIES"

ADVANTAGES OF A FORECLOSURE

 

  • The process of purchasing is much quicker
  • Many times the banks will price the property for a quick sale and under market values
  • Fannie Mae and Freddie Mac (GOVT) foreclosures typically have fresh carpet, paint and appliances
  • Large number of foreclosures on the market
DISADVANTAGES OF A FORECLOSURE
  • Great pricing leads to great competition for foreclosures, leading to multiple offer situations
  • Sale is AS-IS and banks will generally not do any repairs required by buyers lender
  • The "Seller" or "Asset Manager" has no feelings about the home, has never seen the home and only makes business decisions. This takes the emotion out of their decision
  • Many foreclosures have title and condition issues and can not be financed.
ADVANTAGES OF A SHORT SALE
  • High inventory numbers
  • Sellers are motivated
  • Owner occupied properties are typically maintained as opposed to unoccupied properties
DISADVANTAGE OF A SHORT SALE
  • Process can take up to 6 months or more
  • List price is not always the price the bank will approve
  • Bank will not approve repairs needed 
  • Sale is not guaranteed and could be cancelled at any time

Contact Information

The Payne Group
Keller Williams Success Realty
309 Richard Jackson Blvd, Suite 200
Panama City Beach FL 32407
MOBILE: (850) 392-1770
Fax: 888-753-0010