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Buying a Bank Foreclosure vs. Short Sale

By Marnetta Arnett

Real Estate Agent with Keller Williams Realty

March 19, 2013 04:37 AM

Buying a Bank Foreclosure vs. Short Sale - AAA Home Team - 407-928-8652

Looking for a great deal on a distressed home? Lots of great deals in the home market today, great time to buy a home. But there are a few things you should know about Buying a Bank Foreclosure vs. Short Sale:

Bank Foreclosures (REO) - the bank has already taken the home back versus a short sale. The bank looks over their numbers, considers market value, and the reported condition of the home. The list price is set so the bank can reach their bottom line. The bank will accept the listed price, or perhaps a little less, depending on how long the home has been on the market. You will get a fast answer to your offer, usually in a couple of days. Many bank foreclosures are selling very fast, and with multiple offers.

Short Sales - home-owner is upside-down in their mortgage. The owner owes more than the house is worth, so they cannot do a traditional sale. Short sales are asking the bank to “eat” that difference, or accept a short payment. Short does NOT mean the time-frame, in fact they are anything but! You will need to wait 60-90 days or longer to get a response to our offer. Another big thing to remember: the bank may not accept the full price listed. So you can wait several months for a short sale, only to have the bank come back and counter at a higher price. And your patience may not be rewarded. Very few short sales will close - only 1 in 5 short sales close nationally.

For a complete list of all Bank Foreclosures and Short Sales in your Area and Price Range, Visit: www.AAAFloridaHome.com or if you have any further questions, give us a call 407-928-8652

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Wayne Zuhl

Remax First Realty II - Cranford, NJ

The Last Name You'll Ever Need in Real Estate

Great post Marnetta! It's been our experience that REOs sell MUCH faster than short sales. You explained the difference between the two really well. Thanks!

Mar 19, 2013 04:47 AM

Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

What?? Short sale doesn't mean the time frame????

Bank owned homes for sale is little hardly different from a regular sale.

Short sale is a crap shoot.

Mar 19, 2013 04:50 AM

Elizabeth Weintraub Sacramento Broker

Elizabeth Anne Weintraub, Broker - Sacramento, CA

Put 40 years of experience to work for you

Some real estate agents do not qualify their short sale listings and therefore the listing is not really a short sale listing, it is a colossal waste of time. It is a sign in the yard of a home that is not really for sale. Know your short sale listing agents and choose wisely.

Mar 19, 2013 05:01 AM

Paul McFadden

Responsive Pest Control - Seattle, WA

Pest Control, Seattle, WA.

Thanks for the comparison. I have been told that REO's are a better way to go due to time issues. Thanks again!

Mar 19, 2013 05:26 AM

Rob Lyszczarz

RE/MAX Properties Unlimited - Westfield, NJ

Marnetta, What percentage of your distressed sales are foreclosed versus short sales prior to?

Mar 19, 2013 06:05 AM

Jon Quist

COLDWELL BANKER Howard perry and Walston - Clayton, NC

THE BUYERS ONLY Realtor since 1996

Like Lenn says, a short sale is absolutely a crap shoot. And I don't care how good of an agent YOU are, that won't affect the seller's bank.

Mar 19, 2013 08:18 AM

Anonymous

Marnetta Arnett

Great comments! I agree, and have often said that the biggest problem with short sales can be the listing agent. If the listing agent doesn't do their homework and pre-qualify the potential short sale, bad. And if the short sale package is not complete, also bad. Few years ago, as buyer's agent, my buyers kept losing short sales, so I tried to unravel the mystery. I took several short sale classes and designations, including CSP (Certified Short Sale Professional) and CDPE (Certified Distressed Property Expert).

As a LISTING AGENT, I have listed and sold ALOT of short sales, and they are challenging. But so gratifying to save someone's home from foreclosure and help a family out of a tough and upsetting situation.

Now, as a BUYER AGENT, I take some time to call the listing agent and ask several critical questions to find out about their process and what to expect if my buyer places an offer on a home. I can send anyone my basic list of question.

Mar 19, 2013 09:12 AM

Myrl Jeffcoat

Sacramento, CA

Greater Sacramento Realtor - Retired

I've done a number of REO sales in my career, but really few short-sales. I've done absolutely none in the past 5 years, and refer them out instead. The difference between an REO and a Short-Sale, is huge.

Mar 19, 2013 10:00 AM

Mark Horan

Resident Team Realty, LLC & Toni's Property Management LLC - Saint Cloud, FL

"The Resident Chef" - Resident Team Realty LLC &

Marnetta, currently here in Central Florida there is no price break for distressed properties unless they are damaged. Banks know the buyers have no options, so they are pricing them equal to traditional sales.

Mar 19, 2013 10:21 AM

Thomas Santore Lic Associate Real Estate Broker

Coldwell Banker Realty/Coldwell Banker Commercial NRT - Yorktown Heights, NY

Realtor®-ABR-Land, Residential & Commercial Sa

I have a Short Sale Listing and we have only been in contract for 6 weeks and already have been accepted by the bank should close in the next 30 days. When done right they can go pretty fast. Not a big number of these can be pulled off in this time frame. But done right and it can happen!

Mar 19, 2013 10:32 AM

Marnetta Arnett

Keller Williams Realty - Altamonte Springs, FL

Love to hear success stories. Have had a couple of short sales with bank approval in just a day or two, but alas, the exception. And bank had their act together. Bank foreclosed homes are alot easier, faster but they also have some challenges. With inventory being so low, is hard to find the right home for buyers.

Mar 19, 2013 11:10 AM

Debbie Cook

Long & Foster Real Estate, Inc - Silver Spring, MD

Silver Spring and Takoma Park Maryland Real Estate

This is an excellent informative post - sweet and simple and all true!

Mar 19, 2013 12:13 PM

Wika Hutchinson

Eugene, OR

Broker, CRIS, SFR, CDPE

Thanks for sharing the post Marnetta, I noticed a few short sale that are failed, but I am surprised to read that 1 in 5 hort sale will close. It seemed very high; I am curious to see where or when this study was conducted.

Mar 19, 2013 02:47 PM

Marc McMaster

RE/MAX Centre Realty - State College, PA

Putting my clients before myself

We've been working on short sale approval with Bank of America for almost 3 months. Completely unresponsive seems to be the norm with BOA.

Mar 19, 2013 08:47 PM

Amanda Christiansen

Christiansen Group Realty (260)704-0843 - Fort Wayne, IN

Christiansen Group Realty

I've had a lot of buyers ask me if short sales and foreclosures were the same thing. This is a great explanation that they are not the same. Well done.

Mar 19, 2013 10:19 PM

Keith Lawrence

Christie's International - Mahwah, NJ

ABR, SFR

Good information. Here short sale listing are on the rise since we are a judicial state. The time frame of doing them depends on the banks.

Mar 19, 2013 10:47 PM

Michael Setunsky

Woodbridge, VA

Your Commercial Real Estate Link to Northern VA

Marnetta, good explanation pointing out the differences between an REO and a short sale. 20% of short sales closing doesn't seem like very good odds for getting a short sale completed.

Mar 19, 2013 10:57 PM

Derek Goude

Equity Oregon Real Estate - Portland, OR

Derek Goude

In our area short sales are closing quicker then last year. The banks are playing nicer, but it is still very case specific. Worst case for the bank is that they foreclose on the home and best case is the home owner overcomes their hardship and makes good on the loan.

Mar 20, 2013 05:12 AM