Short Sales vs. Foreclosures

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Short Sales vs. Foreclosures

    Short Sales and Foreclosures

    The Better Living Group has the competitive edge when it comes to short sales and foreclosures.

    Short Sales and Foreclosure purchases are a reality in the real estate business. We are proud to say that The Better Living Group has had an incredible track record of success on both the selling and the purchasing ends of the industry. Traditionally, we have achieved a 99% approval rate on short sale listings. 

    We understand the nuances and special circumstances surrounding short sales and foreclosures, and we effectively represent both buyers and sellers in those situations.


    FAQ's

    What is the difference between a Short Sale and a Foreclosure? 

    A short sale occurs when a homeowner sells their property for less than what it will cost to pay all outstanding mortgage loan(s) and/or all other lien balances in full at closing. When a Seller chooses to short sale their home, they understand that they will need approval from their lender in order to close the sale with the Buyer(s). At this time, the property is not a foreclosed property. A foreclosed property is when the homeowner and lender have already gone through the foreclosure process, no short sale has been completed, and the lender now owns the home out-right. This means, the homeowner does not own the property nor has any rights to it — all ownership rights belong to the bank.


    What are the risks and ramifications of a short sale?


    The risks for a short sale are as follows, however, not all may apply:

    1. Failure to obtain approval from all lender(s)/creditor(s) with a mortgage/lien against the property may prevent the sale from closing.
    2. Short sale approval from all lender(s)/creditor(s) are time consuming, may delay closing and may not be accomplished within expected timelines.
    3. Creditors will likely require disclosure of personal assets and financial records, including copies of tax returns, to determine approval of a short sale.
    4. A short sale may require Seller to pay some or all of the amounts owed at or after closing.
    5. Seller’s credit will be impacted as a result of a short sale transaction.
    6. Seller may incur tax consequences as a result of a short sale.
    7. The approval of a short sale is never guaranteed.

    What are the risks and ramifications of a foreclosure?


    The risks for purchasing a foreclosure, as well as a short sale, are as follows:

    1. The property is being purchased AS-IS, which means often times, there will be no remedies or repairs made per the Buyer’s inspection – what you see is what you get. 
    2. There will be no warranties or guarantees made for the property, unless granted and/or agreed upon by the bank.

    What are the benefits for purchasing a short sale or foreclosure?


    Many foreclosed or short sale homes are not in bad condition; they can be move-in ready, having been kept up by the homeowner or had minor cosmetic repairs completed by the bank. The sale of these types homes are typically due to a specific hardship that has made the property available. These properties are also often listed at a discounted price range, which makes them more affordable for those looking to get more home for the money. 


    What are some good tips to know about a short sale or foreclosure property?


    When selling or purchasing a short sale property, the best tip is to be flexible and patient when it comes to closing the sale. The average time it takes from the final agreement being made with the Buyer and Seller to closing is about 5-7 months; 4-6 of those months is for the bank approval process. It is possible that the bank could approve a short sale in a shorter amount of time, however, it could also take much longer – it really depends on the bank, how many loans there are and who is working the file.

    For a foreclosure property, the time frame is as typical as a traditional sale in that it typically takes 30-45 days to close. The best tip to keep in mind when purchasing this type of property is that the bank has no emotion when it comes to who you are personally and why you love the home. The bank is concerned about your financial ability to purchase the home and what they will receive monetarily out of the sale — and they will negotiate in that manner.