Are you in the market to buy a home? Or maybe your in the market to sell your home? Either way an important question we get asked often is what is the difference between a short sale or a foreclosure?
With out going into a long drawn out explanation I would like to help you understand. A short sale is a transaction in which the current seller (home owner) is trying to sell there home for less then what is actually owed on the home. In this situation the seller and there agent will list the home at what we call "Market Value: meaning a price that will make this home sell in today's market. After receiving an offer and the current seller accepting it, this offer along with other information in regards to the sellers financial status will be submitted to the lien holder or bank who has the loan on the home. The bank will then have a team of people help them make the decision as to whether the sale of this home at this price is a good financial move for them.
Buying a foreclosed home is different in that the seller of this home is usually a bank. Meaning this home has already been foreclosed on and the bank has already had there team of people decide what this home should sell for as quick as possible.
There are pro's and Cons to both, for example when buying a foreclosure, because the bank has already determined a price it will be a quicker transaction. Although with a foreclosure or bank owned home, the banks tend to be less willing to negotiate, therefore they have a specific close date ,they expect and in many cases will have a penalty for not meeting this deadline.
A short sale will generally be a more time consuming process and is a little more of an unknown because as your offer may be accepted by the seller you truly don't know if this home will be yours until the bank approves the sale for less then what is owed? This process can take 90 but in most case up to 120 days to happen. This time frame sometimes is better for a buyer. So it truly depends on what you are looking for.
Either way buying a home is a very stressful and rewarding decision so it is very important that you have an agent & lender that you trust to work with. This will make your home buying experince a less stressful one.