As a Buyer's agent, I try to focus on homes that are capable of actually closing escrow in 45 days. When a buyer is searching on the internet, they do not understand that the price that is posted is not necessarily what the bank will take for the home. Also, the seller is not able to sign off on a purchase contract for a particular price, the bank has to review and approve the new sales price. Banks can take as long as they want to respond to an offer, if they choose respond at all. I have seen it take 6 months for a counter to an offer to purchase a home. Most buyers have no idea how lengthy of a process it is to purchase a short sale.

So, when counseling my buyers at our first meeting, I go over what is entailed and what they can expect if they choose a home that is a short sale.

The only situation involved with a foreclosure is that if it is priced competitively, you may have multiple offers presented to the bank and end up in a bidding war situation.

Depends on what is most important to you. Are you looking for an investment, family home, retirement home????

If you are strictly looking at purchasing a home at the lowest price possible, then probably a short sale. Some agents won't show them, some banks won't agree to them, some sellers aren't really even trying to sell them...just trying to prolong the foreclosure process or trying to do a loan modification.

Foreclosures are great but between the bank's automated valuation system and paying for broker price opinions, and getting price input from the listing agents, they aren't always a super value....and the ones that are????? Get ready for the bidding battle to begin.

If you can tell me what is most important to you, then I can easily help you determine what is the best way to purchase a home in today's market.

DaveO@theOCmls.com

It depends on your time frame. Most short sales are priced a little lower compared to market value but could take 6 months. Both could require work. It really depends on the buyer and your goals.

Foreclosures! Short Sales have few guidelines, timeframes, etc.

Foreclosure: Many need more work to be done. The previous owner is p'od at the world & maybe ripped out light fixtures, tubs and everything possibly including the kitchen sink. Although you will get a quicker answer from the bank to your offer, there is still a massive amount of competition, more so than with short sales.
Even if your offer IS chosen as highest & best it could still take up to 60 days for the foreclosing lender to get their paperwork in order so you can close.

Short Sale: Usually in better shape, less competition for offers because most agents out there do not want to work with them, so they tell you that "they take too long, it'll never get approved blah blah blah". The truth is short sales are being completed quicker. Banks are typically approving a short sale in under 40 days (30-45days) & some banks are approving them in under 2 wks.
As long as your offer is the highest & best submitted (highest doesn't always mean best,,, fyi) and you KNOW the listing agent has ONLY submitted your offer to the bank, you've got a great shot at getting it.

Let me know if you'd like to talk strategy.

emilyknell1@yahoo.com

Hi there Steve, Both are usually good options. Equity is still the best though.
Foreclosures can sell fast , short sales take longer . There are pros and cons to each kind so it really depends on the property and the buyer.

What is Foreclosure?
Foreclosure is a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. The foreclosure process begins when a borrower/owner defaults on loan payments (usually mortgage payments) and the lender files a public default notice, called a Notice of Default or Lis Pendens. The foreclosure process can end one of four ways:
1. The borrower/owner reinstates the loan by paying off the default amount during a grace period determined by state law. This grace period is also known as pre-foreclosure.
2. The borrower/owner sells the property to a third party during the pre-foreclosure period. The sale allows the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history.
3. A third party buys the property at a public auction at the end of the pre-foreclosure period.
4. The lender takes ownership of the property, usually with the intent to re-sell it on the open market. The lender can take ownership either through an agreement with the borrower/owner during pre-foreclosure, via a short sale foreclosure or by buying back the property at the public auction. Properties repossessed by the lender are also known as bank-owned or REO properties (Real Estate Owned by the lender).

Pre-Foreclosure (NOD, LIS):
Buying a property in pre-foreclosure involves approaching the borrower/owner and offering to buy the property outright. The borrower/owner can walk away with something to show for any equity in the property and avoid a bad mark on his or her credit history. The buyer has time to research the title and condition of the property and can realize discounts of 20-40 percent below market value.

Bank-owned (REO):
If the lender takes ownership of the property, either through an agreement with the owner during pre-foreclosure or at the public auction, the lender will usually want to re-sell the property to recover the unpaid loan amount. The lender will then typically clear the title and perform needed maintenance and repair; however, the potential bargain for these REO homes is typically less than a pre-foreclosure or auction property. Bank foreclosures can become government foreclosures if the loan is backed by a government agency such as the Department of Housing and Urban Development (HUD) or the Department of Veterans Affairs (VA). In that case the government agency would be responsible for selling the property

Great question. From the answers below, you can see that there are pros and cons to each. If you are considering a short sale, ask questions such as "Who is negotiating the short sale on behalf of the borrower?" and "What kind of experience does the negotiator have?" You definitely do not want to get into a situation where you are working with individuals who do not have experience dealing with the banks.

There are definite benefits to purchaisng foreclosures as noted below. Many folks state, however, that short sales (if you are willing to wait) are usually in better condition at close of escrow.

Good luck!

You can get great deals on both. With the short sales you have to have more patience and a longer purchasing timeline but depending on where you are looking you may find that there are more short sale deals to consider than there are foreclosures.

If you have further questions don't hesitate to contact me using my profile or the weblink below.

Steve,

If you buy a short sale you need to have patience. A short sale is still owned by the seller. Once the home is foreclosed it is owned by the bank. When you make an offer on a short sale the bank needs to approve it. This will take at least 3 months and often takes longer. If you love the home and you don't mind waiting go for it. Just know that it may or may not get approved so you could wait for nothing. A bank owned will close can close in 30 days. At this moment there are many short sales and not so many foreclosures but this is suppose to change in mid September.

Hi Steve,

I don't think it matters..as long as the price is right! My favorite would be an equity seller....they can do termite work and make repairs. The key is to check the comps and not over-pay....

Karen

Steve,
Each property is an individual case by case deal. I have seen terrific deals on both. For the seller usually a short sale is better, and sometimes the banks will go the extra mile to make the deal happen.

Good Luck