These are great ways to get amazing deals on properties, but be aware that there is often a real time drawback to this type of purchase.
A ‘short sale’ is where the seller still owns the house, it has not gone into foreclosure, but they owe more on the property than the market value will now support. In order to facilitate this type of purchase it requires that the lien holder (the bank or mortgage company) has to agree to forgive the lien amount to an amount that will allow the sale. So – there is a third party involved. This third party is also a corporate entity, and I don’t think I need to say more about wading through that ditch.
A foreclosure is where the bank now owns the property, and is trying to sell it to the highest bidder. Again, you are dealing with an entity that has no time constraints and sometimes by their behavior you are going to think they don’t have any motivation either. They also will not know anything at all about the property so be sure and get all of your inspections and due diligence out of the way before you make this commitment.
In both of these scenarios, the closings can take up to 6-10 months or even more! With a foreclosure the timing is a bit better, than there are no guarantees.
So, if you are in a hurry – buy your new home from a private seller who has it listed with a broker in the MLS so that it has full disclosure on conditions that are important to you – and make your offer according to your time line.
Happy home shopping! If you would like more information about how to buy a short sale or foreclosure property, please feel free to contact me anytime.