Short sale or Forclosure? Looking for a bargain
For those of you in a position to invest in real estate for the first time, you are probably looking for a bargain. While there are bargains to be had, are you only looking for foreclosures or maybe a short sale? It pays to know a little about each category before you buy.
Short Sale:
If a home is sold below what is currently owed to the Lender or Investor and the seller does not have other funds to make up the difference at closing, it is a short sale. Many homeowners are finding themselves in this situation. It is wise to consider that even after coming to an agreement with the home owner the bank must also agree. If there is only one lender it could take 2 months to get an answer. If there is a second lender, it could take as long as 4 months or more depending on the lender.
Your finances must be in order and you must be able to show that you have the finances or the cash and able to accept a flexible close date. Some of the other risk are no repairs, bad terms, potential for rejection
Foreclosure:
The Bank or an Investor has taken title of the home and is selling it directly. It may or may not be a good deal. Sold as is, where is. You must be patient as you may have to wait for a yes or no. A home owner knowing they are losing their home may damage the property prior to leaving and/or stop doing repairs. Even if the home looks ok cosmetically, have it checked out.
Please note this is a very general overview of both positions. it is not provided as advice for a specific matter. Laws vary from state to state so please consult an attorney or CPA.