As unfortunate as it can be when homeowners fall behind on mortgage payments and must face the possibility of losing their homes, short sales and foreclosures provide them options for moving on financially.
The terms are often used interchangeably, but they’re actually quite different, with varying timelines and financial impact on the homeowner.
Here’s a brief overview.
A short sale comes into play when a homeowner needs to sell their home but the home is worth less than the remaining balance that they owe.
The lender can allow the homeowner to sell the home for less than the amount owed, freeing the homeowner from the financial predicament.
On the buyer side, short sales typically take three to four months to complete and many of the closing and repair costs are shifted from the seller to the lender.
On the other hand, a foreclosure occurs when a homeowner can no longer make payments on their home so the bank begins the process of repossessing it.
A foreclosure usually moves much faster than a short sale and is more financially damaging to the homeowner.
After foreclosure the bank can sell the home in a foreclosure auction.
For buyers, foreclosures are riskier than short sales, because homes are often bought sight unseen, with no inspection or warranty.
This mostly applies for buyers buying at an auction.
If you are looking to buy a home that is labeled as a “foreclosure” and not “in the process of foreclosure” you are most likely looking at an REO Property.
REO stands for Real Estate Owned and is also known as a Bank-Owned Foreclosure.
An REO Property is a house that has been foreclosed on and that doesn’t sell at auction.
After the lender has prepared the home to be ready for sale, the lender will work with a real estate broker to put the REO property on the market.
Short sales and foreclosures are two different things that you might or might not want to get involved with when purchasing a home.
Given the level of complication, you will benefit from hiring an expert, such as a real estate agent like my self, to help you navigate through your home buying process.
If you live in the Las Vegas area and would like more info, contact me today.
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Jeff Herrera, Licensed Real Estate Agent, Lyons Share Real Estate.
Serving Las Vegas and Surrounding Areas.
Have Questions? Call Today! (702) 481-4887