There is no single answer to this....each situation is different. Both can be purchased for good prices and both can come back with unreasonably high counters. The only way to see is to find a very good agent and analyze each situation on it's merits....the comps.
I don't work in Los Angeles..but have a great agent up there that I refer people to. Let me know if you'd like to get her name...shoot me an email and I'll put you two in touch. She's great and can really help you make sure you are getting the best possible price/terms.
(didn't think I would noticem huh?)
The statistic I've seen is 10% of the Shortsales that are applied for actually go thru.
Once it gets to Escrow?Contract, the number is signifantly higher, but still only 40%.
As to which is the lower price/better value:
Short Sales are generally in better condition, and,
Foreclosures are almost always rough; needing some work.
So it is hard to compare them.
I would venture to say that it comes out about even.
So, why go with a Short Sale and the time element;
Because it's there!
Good luck and may God bless
As a buyer's agent, I had a client with a really strong offer in first place position not close. The bank actually foreclosed on the property anyway after telling the listing agent the auction was postponed. That one came back on the market as an REO (bank owned foreclosure) several weeks later for $40,000 less. Another time the bank wanted the buyer to pay a significant amount of money in escrow, and the buyers didn't have enough, so that sale fell through. A different time the sellers filed for bankruptcy mid-escrow, and that stopped the short sale in it's tracks. The buyers got their good faith deposit back, but they paid $500 for an appraisal and $375 for an inspection - a lot of money for some buyers to lose. No one has control over the buyer's actions or the bank's; anything can happen, and not all banks cooperate.
I've never had a foreclosure fall through, of course all the properties were chosen wisely, and repairs well negotiated, sometimes cleverly. These homes are not always in the best shape sometimes, but at least you get to own it in 30 days if the bank can close by then, and most can. Let me know if you'd like help with your home search.
It all depends on the negotiator in a short sale. If the listing agent is a savvy negotiator then great..if the buyer agent is a savvy negotiator and the listing agent will allow the buyer agent to do the negotiations..then awesome! It's whoever is a better and more experienced negotiator.
In a bank owned home...once it is listed on the mls or market..the bank wants the price it is listed at or higher. They really won't entertain low ball offers. It all depends on if the property is priced right to begin with.... if it is..then it will go in a few days with multiple offers..if it is too high, then it will sit and sit and sit..and this could be a good time..when the bank is not getting offers anymore, yet they have not lowered the price yet...to come in with a realistic offer at a price it really needs to be at...and this is when you usually get lucky and can get it at a lower price.... Hope this helps...
If a bank is involved with a deal, it's terms are typically far less flexible than those with a traditional seller. During the past several years, I've honestly found it far easier to cut a good deal when there is a real person on the other side of the table. Give it some thought!
Foreclosures use to be the easiest Real Estate transactions. I mean the Real Foreclosures at the court house steps AUCTION.
Buyer shows up at the auction,
Trustee starts the auction with the opening bid, in most cases, the total amount that was owed ( mortgage balance plus late fees ) plus trustee fees
Trustee opens up for further bids.
YOU the buyer make your bid, at least $100 more than the Trustees Opening amount.
If you WIN the bid, you give your big certified check ( 5 % to 10% of your bid amount ) to the Trustee
You fill out the paperwork, and after the upset bid period. Some states do not have an upset period, but the auction is absolute.
If the auction is absolute you must have the FULL amount in a cashierâ€™s check made out to the Trustee.
If there is an upset bid period, 10 or 30 days for example, the Trustee calls you to meet at the court house and you bring the balance of funds needed to the Trustee, and you finish the paperwork.
VOILA the house is yours. Simple and clean transaction.
SOLD AS IS
Inspection is by and for your info only, Seller does not care
No Loan, must have Cash or good banker to work with.
Just because you purchase the home at action, does not mean you bought a great deal. Some of these foreclosures are being sold for MORE then the value of the home is with in the current local market place.
Do your home work. Foreclosures are not for the faint of heart.
Sometimes a foreclosure is a really good deal, especially if it is the right house for you.
I would encourage you to look at everything that is on the market that meets your search criteria. Don't just focus on the foreclosures and short sales.
Happy house hunting and good luck.
In a short sale, I prefer to go with the ones where the Listing Agent publishes the price that the Bank will take. Usually, in these kind of situations a previous Buyer submited an offer and the offer was accepted or countered by the Bank but the Buyer decided to "walk" and not buy the house (too much time went by, financing failed, etc) but there is a price figure that the Bank will accept; so, if you offer the same price you could get the deal and it will go much faster than the regular short sale where the Seller's paperwork needs to be sent to the Lender, Buyer's paperwork needs to be sent also and weeks or months can go by without an answer.
REO's do have some differences from regular sales though:
1. You can wait some time from verbal acceptance to receiving the signed contract- sometimes weeks.
2. You can do inspections but you won't get the same level of disclosures - reo's are exempt from many because the lenders never occupied the property.
3. Response times can be much slower and contract timelines often expire during the process but can still close
4. REO agents are often out of area and don't know the market which makes the process a lot more complicated.
Foregoing aside, prices are often better than market if you are willing to deal. Also note that these properties often need repairs/upgrades, but we have done a lot of these and it has always been worth it.
Short sales are much more complicated because there are generally no definitive timelines and they can take up to months to close - or not. Although we have also done successful short sales I would go for foreclosures and save the headache.
Lance King/Owner-Managing Broker
As for control over your price, there honestly tends to be very little when buying either a short sale or a foreclosure. Banks rule and it's based entirely on numbers.
You certainly are free to write an offer for the price you choose. If there are multiple offers on either a short sale or a foreclosure, banks will generally choose the highest bidder and the one wtih the most cash down.
I've found that I can often negotiate a better deal for my buyers when bidding on a traditional, equity sale. With these, a personal letter, personal feelings between buyer and seller all play a role and can often help a buyer when a seller like the buyer.
At the risk of sounding like an infomercial I will say that RE Market Solutions has closed over 1000 Short Sale Transactions. I wish I could say that we have not had a transaction fall through, but that would be ludicrous. Yes there have been transactions that have feel through, but our percentages are very high.
Of course our success has much to do with our focus on providing the Short Sale negotiation. We do occasionally represent a homeowner, but by and large we help real estate professionals. It is through constantly working with the Short Sale market that we have such success.
Which is easier a Foreclosure or Short Sale? I suppose that depends on a lot of factors. If your agent is working with a Short Sale negotiation team, or the agent is experienced with Short Sales, it can be relatively painless. REO property can be less complicated but still has it nuances. Either way the agents representing both sides (or the bank) better have it together.
In the end I feel that buying a home in many circumstances is about the home its self. If you find a home that you like, in a good neighborhood, and provides you with the amenities you desire; the type of transaction wonâ€™t matter.
Of course if you are buying the home as an investment, then that changes everything.
Hope this helps,
RE Market Solutions provides Short Sale solutions for Real Estate professionals and their Clients. No upfront fees, no gimmicksâ€¦ There are no problems, only solutionsâ€¦
Perhaps it's different in LA, but generally speaking you will get a foreclosure cheaper than a short sale. More importantly, once an offer price is accepted you won't get any last minute requests from the bank to pony up more cash, and you can close them in 30 days just like any other transaction.
In our area most short sales take significantly longer, often ending in no deal and buyers who are frustrated by having waited for months just to start looking all over again.
Either way, make sure you have inspections as sellers on their way out and in financial distress are not usually taking care of maintenance the way they should.
Lance King/Owner-Managing Broker
If the price one wants to pay is reasonable to the owner:
a. the foreclosure's yours in 30-45 days.
b. the short sale could be yours in 6+ months....if you're lucky.
There is no easy way to say you will be able to buy a short sale for the price u want, because the offer has to go to the bank. Also, before your offer goes to the bank, you have to make sure the agent listing the short sale and the owners of the house ACCEPT your offer in order to submit it to the bank. Then you have to go thru the waiting period to see IF, god forbid, your price will be accepted. Rarely does the bank accept the price that a buyer submits, especially if it is a low one. They will usually counter offer you. If the bank does not get a price they are willing to sell it for. They have no problem letting it go to foreclosure. Or if you don't agree to the price, and walk, then agent has the ability to take a back up offer who WILL pay the higher price in order to avoid foreclosure. There is NO STEALING a home for a low price. Same with the FORECLOSURE property. U can submit an offer and bank may agree and let u open escrow. However, if they don't, then they will wait for another higher offer from a back up buyer.
You can get good deals on houses that, if they are not a bank foreclosure or short sale, have been on the market for a while and have not sold. These homes are usually overpriced and if the agent would simply have lowered the price , it would have sold. These are the people who usually are NOW ready to listen to reason and SELL.
Good luck! There are lots of deals out there whether they are short sales, foreclosures, or regular sales. Just be diligent and you will get lucky and find one that u like.
Sheyenne Schultz 310-429-4170 email@example.com
Need to BUY? Just call Shy!
Real Estate Network Group
REO/Short Sale Specialist.
All the best,
Paul Doroshuk, Broker
You pretty much got the idea now and the answer on your question so I won't talk much about the differences here between shortsales and foreclosures(bank owned). I do a lot if shortsales and love them (sometimes:)) but it could be a two sides of the coin sometimes. If you get lucky with an agent that negotiates the file you might get the following benefits;
1. Decent price deal
2. Good condition of the home
3. Better chances for your offer to be accepted
Here are the negative sides;
1. Longer wait time (3-7 months)
2. Transaction might not go thru and house will be foreclosed
3. Accepted price will be changed to much higher
4. You could be asked to pay some upfront fees or extra charges
Foreclosures(bank owned) mostly is a fastest sale but also have bad and good sides. Here is a good side;
1. Fast buy
2. Clean deal
3. A lot of times price can be a great deal if offer accepted
4. No surprises
1. If FHA financing or low downpayment, your offer will be almost the last one to be accepted
2. Most of bank owned have multiple offers and you have to overbid
So do your homework and think.
Your realtor will have to dedicate all 100% of his time to your success to be on top of the listings as they arrive on the market!!
Wish you best luck with your house hunting.
Foreclosures are a faster way of getting the properties.Short Sales have to be approved it can take months to close and up to 2yrs as we're seeing. Foreclosures is pretty fast.
Remember both come with headaches that you may not get in a regular sale.
Condition of properties, prior liens may apply with foreclosures. Beware of the thousands and thousands of dollars you may spend in short sales or foreclosures as opposed to regular sales.
All the Best
Dave & Lisa
Short sales still average 6months in wait time, and once the bank sets a price, there is little negotiating room. Usually no more than 5%.
Id go for a foreclosure unless I had s specific reason to venture on short sales or it was the perfect home & I was willing to wait on a
Regarding a short sale you can negotiate a price with the seller and the bank may not agree to that amount. You could wait months for a response and it could not come back favorable. However usually you can get a short sale for less money if you are not in a rush.
Call me if you want to discuss this more
Phil Gorman, Broker
Keller Williams Realty