Q: Is buying a foreclosed property much SHORTER than a short sale?
A. Yes. When you are buying a foreclosed property, there is only one decision-maker, the bank. Once they have decided to accept your offer, a foreclosed property sale can close in as little as one week, or as long as it takes the buyer to obtain their financing and have the attorney set up the closing. When purchasing a short sale property, first the Seller must agree to the contract and sign it, and then it must be submitted to the Seller's bank for approval of the short sale. Most buyers will not want to be paying for inspections and starting the process for obtaining a purchase mortgage without having the Seller's bank approval in place. While there has been a lot of streamlining of the process, getting the short sale approval from the Seller's bank can take anywhere from several weeks to several months. Once that happens, the buyer's loan approval still has to be obtained. That can take a couple of weeks if the buyer has started a pre-approval process (the bank will still have to do an appraisal and underwrite the file), up to approximately 45-60 days for a traditional process of getting a mortgage commitment.
Q. Is buying a foreclosed property much EASIER than a short sale?
A. Generally, yes, once the buyer has an agreement with the Seller/Bank, arranges financing, and sets up a closing, you are done. It is much like a "standard" purchase, although there are some specific issues that you deal with in purchasing a foreclosed property and you will want to be sure you and your agent are knowledgeable about them.
1. The seller has never lived in the home and does not provide the typical disclosures.
2. The seller usually requires you use THEIR contract and/or addendum, which usually has a lot of specific clauses that benefit the bank.
3. The home is almost always sold in "AS-IS" condition. While you are allowed to perform inspections on the house for your own information, the bank will generally not fix anything in order to sell the home.
4. Foreclosed homes generally have a lot of deferred maintenance. Homeowners who lose their houses most often struggle with financial problems for an extended period of time before the bank takes ownership of the home. This can be several months to even several years of struggle, and many normal maintenance items may have not have been performed.
5. The home is typically vacant. Banks that own homes will generally "winterize" them to protect them from damage in colder weather, so the plumbing, water, and perhaps heating and electricity may be off. Getting them turned on for inspections is an additional cost to the buyer. Be aware that sometimes the house is vacated in the middle of a cold season, and even though the house may get winterized, it MAY already have some damage from freezing.
For SS's; we have seen 2-12 months for acceptance and 45-60 days for the Escrow; if there is a 2nd Lien, you can increase that logrithmically.
On a SS you probably will get better conditions (the house) and you will be helping the Homeowners.