Buyers and Sellers have many questions about short sales and foreclosures. As in most areas of the country and Pennsylvania, the Monroe County and Pocono area is experiencing an increased level of homes for sale that are associated with short sales and foreclosures.

The Pocono area encompasses all, or portions of, Carbon, Monroe, Pike and Wayne counties.

There is considerable misunderstanding by buyers and sellers about foreclosures and short sales.

Foreclosures

There are basically two levels of foreclosure.

 Homes or properties that are presently in the process of foreclosure, pre-foreclosures.

 Homes or properties that have actually been foreclosed upon, foreclosures.

Homes that are in the process of foreclosure are homes where the owner has fallen delinquent in their payments and the lender has started the process of acquiring title to the property.

The normal process will involve a sheriff's sale wherein the lender will attempt to have the home or property auctioned for an amount that will allow the lender to recover the outstanding debt owed and the associated costs. If the property does not sell at Sheriff's sale, the lender acquires legal rights to the home or property, subject in some cases to a redemption period.

Homes or properties where the foreclosure process has been fully completed, the right of redemption period has ended and the lender has obtained ownership of the property, are commonly called foreclosures or REO properties. REO stands for Real Estate Owned.

Sometimes an owner will participate in what is termed a deed in lieu of foreclosure. In this instance the owner will convey title to the property directly to the lender to avoid the foreclosure process.

Homes for sale that have been foreclosed upon are normally offered through real estate brokers.

Short Sales

A short sale is when the homeowner sells their home for less than what is owed on their loan, and the lender accepts that amount as payment in full. The seller escapes foreclosure and the corresponding hit to their credit report.

They do sustain a smaller hit on their credit report for any missed payments and for the short sale. Also, the seller does not make any money from the sale of their home. The homeowner will have to prove that they are financially insolvent. 

The Differences to Prospective Buyers of Homes

Prospective buyers need to be aware, when making an offer on a potential short sale property, that there is an extended period of time involved before they will receive an answer from the lender. As short sales and foreclosures continue to increase, so does the burden and workload of lenders loss mitigation departments.

The time period for a response from the lender on a short sale property is generally a minimum of 30 days and can, in some instances, exceed 90 days on a short sale home.

Foreclosed, or REO homes or properties can be much less frustrating for a prospective buyer. These homes for sale are already owned by the lender and response time when an offer is made is usually only a few days.

As a buyer, it is important to secure the services of an experienced real estate agent to assist you in attempting to purchase a short sale, foreclosure or REO property home for sale. An experienced agent will be able to help you assess whether your personal circumstances will allow you to consider the various types of properties available.

Bill Wagner

maximumagent.com