Foreclosures and short sales seem to go hand in hand with bad economic conditions. According to RealtyTrac.com there are over 1,500 properties that fall into the foreclosure, pre-foreclosure or short sale category in the greater Charleston area. WOW!
What does this mean? Yes, it means people have lost their homes. It also means that banks are holding property and that there are an inordinate amount of great values in the marketplace. As with any bad economy, the way to get it jump started is for people to start buying again. Right now, interest rates are low, inventory is plentiful and the prices are right.
So now you have to know ~ what is the difference between foreclosure and short sale? Believe me, if I had a dollar for everytime I've been asked int he last 6-months, I would retire. Many people and unfortunately agents alike are not versed on the benefits, pitfalls and process in dealing with either.
So here we go? Foreclosure means that a bank or lender has taken over ownership of a home because the homeowner couldn't make the mortgage payments. Real Estate Owned (REO) is another term used for foreclosure. In a short sale scenario, the homeowner can avoid foreclosure by selling the home for less than is owed on the mortgage. Let me tell you up front, the short sale process in not an easy road to travel and banks and lenders usually take their sweet time.
Given that in a short sale a portion of the amount owed is forgiven, certain conditions must be met for the short sale to move forward.
- The lender has to agree to accept less money. (A banker agreeing to loose money – hmmmm?)
- Owner must have to prove he/she simply can't pay. Break out the documentation becuase without it, well, you have a better chance of seeing snow in the tropics.
One thing to note, a short sale is an easier pill to swallow as it reflects on your credit score compared to a foreclosure.
Of course, buyers of short sales get great deals. The local real estate market gets some much needed relief on negative pressure on home values if the home is sold through a short sale process rather than being foreclosed.
Here is the catch, short sales require patience and a realistic approach to how low an offer should be made. There are enough sources of information throughout the web and of course through your realtor to do your homework. Offer the right price and get a great deal!
Bargain hunters beware, CASH MONEY doesn't mean the bank is going to accept an unrealistic offer. If you are looking for a quick deal, short sales are not for you. Sometimes it could a few months before you hear back from a bank. If you are emotional and impatient maybe a foreclosure is better suited for your personality.
What has been your experience? Good, bad, frustrating, smooth?
