Things have changed a lot in the real estate market over the last 2 to 3 years. It seemed like back in 2008 to around 2012, all you heard about was foreclosures and short sales. They are still out there but not as predominant as they once were. They will always be a part of the real estate market but I thought now would be a good time to revisit the difference for any homebuyers moving into 2017.
The main difference between the two is a foreclosure also known as lender owned, bank owned, corporate owned and company-owned, are owned by a lending institution. A short sale is still owned by the current homeowner but they are currently in default.
Purchasing a foreclosure is no different than buying a home from a traditional seller in that you are dealing directly with the person or entity that owns the home. Yes it's true there are more hoops to jump through when purchasing a foreclosure, but you're getting a better deal on the property typically. One thing I have noticed though in the last 18 months is foreclosures have not been as attractively priced as they had been at one time.
Pricing is the key to getting a deal on a foreclosure or a short sale. You have to understand what that house is worth if it were to be a traditional sale. The tricky part with foreclosures is there aren't as many now so the banks have more time to analyze their files. Plus there aren't as many sales to use his comps so they're starting to look at traditional sales as comps. This is where the foreclosure loses the appeal from the perspective of a real estate agent because you're not really helping your buyer get the best deal.
Short sales are a whole different animal in that you have to negotiate with the seller, then they take the purchase agreement to the bank and ask permission to sell it for less than what they owe. That's where the term short comes from. Many people think short sale means quick but it's the complete opposite. Short sales are by far and away the hardest way to purchase a home. There is no guarantees and the process can take sometimes up to a year.
As a licensed real estate agent I can confidently tell you that traditional sales ultimately are the better way to go. You're going to get a much better home, in better condition with better terms. If you are a buyer who is focused on buying a foreclosure because you want a good deal, I urge you to look at traditional sales as well.
There's so much more to this story that I couldn't log about or I could write a book. Before you decide to purchase a short sale or a foreclosure, feel free to give me a call and I'll be happy to answer all of your questions.