I see many agents have explained to you what a Shortsale and a foreclosure is. The answers are all right but nobody should advice if you should or should not buy a Shortsale. Their is no risk involved in any type of distressed sale if you manage it well. Both sales give you a clean title. Now the only issue is the repairs. When owners are in financial distress the homes get into a prolonged state of disrepair. The buyer makes a decision to get into the transaction based on their own personal scenario. If time is of the essence one may not want to buy a Shortsale. If one has no time or understanding for contractors and repairs they will shy away from them. But the fact of the matter is that Shortsales are the best deals in town. There is a gain to the pain. I will stress it again. There is no risk to ownership in such a transaction. Good Luck!
Vibha Mehra, SFR
Keller Williams Metropolitan
55 Madison Avenue
A short sale is different because the seller still owns the property and is selling so they do not have to go through the foreclosure process, and the bank is willing to take a lesser amount resulting in a loss by them.
That being said, I would steer clear of short sales as they can take anywhere from 3 months to 6 months or more, unless you are not in a hurry. And sometimes even then, they will not be accepted. Most foreclosures close the same as resale or new properties sell.
Let me know if you have any more questions...
Real Estate Professional
If I were you, I would buy a short sale as a last resort. That is my opinion, and I am sure that others will disagree, but I have seen too many deals backfire when the person enters into a contract to buy a short sale.
Start by looking in your price range but be careful as so many seem to be in your price range but end up going $30k over or I have seen some go up $143k no joke. Clearly, get with a realtor who is realistic and tell it like it is. REO's and Short Sales can be great deals right now, think about these must sell and thats the greatest motivation. Find a home you like in your price range and go from there.
The biggest difference between a REO and Short Sale is that the REO most always goes through and the deal closes. The Short Sale has a higher chance of not being pushed through. I say if you want the home give it your best shot. For all available homes REO's, Short Sales, and a few regular sales...
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There are some pitfalls in purchasing a short sale or REO property which are mostly to do with condition, repairs and the "as is" terms on these properties. Regardless of condition these are usually a good buy however if work needed is extensive and you or spouse or family aren't capable of doing the work then it can get very costly. This is a good time to buy and there are good deals even with "arms length" transactions.
The process can vary and especially will vary from state to state. My suggestion is that you find a realtor who is familiar with selling these types of properties in the area where you want to buy and he/she can explain the process to you. Good luck.