The difference between short sales, foreclosures, and resale homes for sale
Foreclosures- Take on a variety of types also termed Bank properties or REO real estate owned, this means a borrower has failed to make payments and the mortgage company has taken the property back. In some states a borrower has the right to redeem their property before it is sold to a new buyer (such as in VA) and some states allow a borrower to come back after a foreclosure sale to redeem their property. Depending what state you are in find out the rules………… Bank Properties/Foreclosures can be sold in a variety of ways from on the court house steps, through auctions, through online bidding, or thru brokers in the MLS (multiple listing service). Usually in most cases the property is to be sold as is with no disclosures.
Short Sales- A current owner needs to sale there home but owes more on their current loan balance then the property is worth. They negotiate a deal with bank to sell the home for less than they owe. The difference between the current loan balance and the new excepted price is called a deficient amount. The bank can agree to wave the deficient amount or depending on a owners assets the bank can ask for a deficiency judgment. This is usually a negotiated amount between Owner and Bank for lower than deficient amount. For buyers this can give you a chance to buy a home you normally could not afford. But becareful of teaser sales prices-often agents price short sales low to attract an offer. A Bank usually wants a fair percentage based off current market value. If you need closing cost assistance this may end up being a hurdle because there is NO equity in the home so if the bank says No and seller can’t pay it- your deal will be in the toilet…………
Be careful of flipped homes – just because it is remodeled does not mean it has been done correctly. Resale homes giv the buyer a chance to negotiate the small stuff, closing cost, repairs, home inspections, closing periods, Home Owners association or condo paperwork, or posession agreements. These little things often call contingencies and are usually not allowed in the negotiations for foreclosures and can be limited in short sale transactions.
Your loan type can dictate which properties you can choose from. Certain loans must meet minimum property standards for the lender to give the money. If you do not know which route you should look at give me a call and I can help guide you thru the process.
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Blu Skyy Realty Virginia Beach, VA
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