The housing market can be confusing and full of terminology that may seem a bit overwhelming. As you browse available houses, understanding these terms and what they mean to you, the buyer, is key. We are going to focus on two terms today, Foreclosure and Short Sale.
What is the difference between Foreclosure and Short Sale?
Foreclosure – In this case, the bank has already gone through the legal process of taking the home back from the owner.
Short Sale – This is when the owner still has possession and is still the legal owner, they just are negotiating with their lender to accept less than what they owe.
So what does that mean to our clients?
Foreclosure – Your agent will be dealing with the owner (The Bank) through an asset manager to purchase the property. These properties are typically sold as-is with the bank doing no repairs to make the property financeable. Banks don’t need to negotiate and allow very little wiggle room on price. No property disclosure form is provided or required on these properties. Many times, they will not allow utilities to be activated for inspection. If they do allow it, it is up to you, the buyer, to manage getting utilities on and paying any fee associated with the process.
Short Sale – The term has nothing to do with how long the process takes. When a seller owes more for their house than it is worth in the current real estate market, it can be sold as a short sale. It is actually a long process and many times a resolution is not agreed upon. A buyer will submit an offer, if the seller accepts, the offer is then sent to the seller’s lien holder (The Bank). The negotiating process that then takes place can vary and may continue anywhere from 30 to 180 days or more in some circumstances. This requires dealing with an attorney who is negotiating with a case manager who represents the bank in negotiating the sale.
A bit complicated right? Well, don’t worry because the real estate professionals at Draper Home Team are here with you every step of the way. So if you decide to step outside of the box and go for a “nonstandard” property purchase, we will be there to answer any questions throughout the process. Give us a call!