As a buyer you may be wondering if it is really worth your time to pursue a distressed property. Foreclosures and Short Sale Homes continue to be the hot topics these days. Purchasing one of these proerties can present multiple challenges that is not found when closing on a typical home.
Is it really worth your time? You will need a lot of patience as these can range from being a big time fixer upper to being in great condition. They can also receive multiple offers which drives up the price and take a long time to close. It's also quite possible that the lender can decide to sell it to another bidder which may take you out of the running.
Differences Between a Short Sale and a Foreclosure
In a Short Sale the sellers lender must agree to take less than, or 'short of', what the seller owes on the property. Even though the property is not owned by the lender, the seller does not have the final say on the price. The seller may accept and offer that you are very happy with and then months later you find out that the lender counters at a much higher price.
In a Foreclosure the lender already owns the property. The lender has foreclosed and the seller is long gone and out of the picture. The owner has already defaulted. This is also known as an REO (real estate owned) property.
Until your offer is accepted by the lender there is no contract. It is quite possible that the lender may accept another offer during the time you are waiting for an answer. The lender most likely will sell the home "As-Is" and not make any repairs. Most of these properties are already vacant but in some cases the current occupant may still be living there. The lender may be in the process of eviction.
Be sure to have any home you buy inspected by a licensed professional inspector. Even though the home may be sold in "As-Is" condition, you should know what repairs may be necessary so that you are informed of what to offer.
Affiliate with a good attorney. He or she will be worth their weight in Gold.
Be patient. This may take awhile.
Be comfortable with a little uncertainty.
Affiliate with a knowledgeable local real estate agent who is experienced with negotiations.
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