Buying Short Sales or Foreclosures - what are the Differences for Miami-Dade Buyers? Let's compare...

Real Estate Agent with First Coast Sotheby’s International Realty

Miami Foreclosure and Short SaleEvery buyer wants a "deal" right now and I don't blame them!  If you are buying in this wildly crazy market in Miami-Dade, you need to feel comfortable about your purchase.  Deals can most definitely be had, often in the form of a short sale purchase or a true foreclosure. 

Here is Miami-Dade County we have a four year supply of houses (compared to a 5-6 month "normal" supply) and at least 1/3 of them are "distressed sales" (foreclosure, pre-foreclosure, etc.).  The properties that are actually closing however, are 2 to 1 distressed vs "normal sale conditions".  This means most buyers are going for the blue light specials.  

Buying a pre-foreclosure or a foreclosure can be very different, both from "normal" sale and from each other.  Let's take a quick look how each one could be from the eyes of the buyer...




Pre-Foreclosure (often a short sale)

In this scenario the seller still owns the house but owes is behind on their mortgage and the lender has begun foreclosure action.  Normally for most pre-foreclosure in Miam-Dade the owner owes more to the lender than a buyer is willing to pay for it so they have to have a short sale approved.  It is a "short sale" because the lender would have to agree to accept less than what is owed in order for the sale to close.  In most, cases due to the pending foreclosure judgment, there is a time factor as they race the lender who is likely working on foreclosing on the house even though the seller is trying to sell it.

Often the owner is still living in the property, which for some buyers, can make it a bit uncomfortable.  They may feel as if they are profiting off of someones misfortune.  I have shown and represented many short sales and please put your mind at ease, most sellers just want to sell by this point and want to get on with their lives.  They see the buyers as "saving" them from foreclosure, not taking something from them.  Miami Foreclosure and Short Sale

Since the owners are often still in the home, it is likely to be better maintained than a true foreclosure, possibly needing little repair work.

Lenders are often letting short sale homes go from 10-20% less than their CURRENT market value.  They do not base their decision on the original purchase price of the home or on the balance of the loan(s), but on what they would be able to sell the home for should they foreclose on it.  It is a business decision for them if they want to take a loss by letting the seller sell it for less or if they want to foreclose and try and sell it themselves.

The downside as many know to buying a short sales take a long time to negotiate.  A typical time-frame would be 4-8 weeks from the offer's submission before you hear back from the bank and another 4-8 weeks to negotiate back and forth with the bank and then another 4-8 weeks to close.  So a short sale could easily take 3-6 months from start to finish.  2 months would be really really fast!

Short sales are great for people who have patience, do not get too emotionally tied up in the deal and might not want to deal with repair work in their new property.  Short sales are often best for new owner-occupants as you normally won't be able to get as steep of a discount as you might need if you are an investor.


Foreclosures (bank owned properties that have already been foreclosed on by the lenders)

Miami Foreclosure and Short SaleIn this scenario, the lender has already foreclosed on the house and taken it back and put it back on the market.  The foreclosed on house will be vacant and possibly in need or repair work such as new appliances.  It might also need new fixtures and may even have been vandalized.  This eliminates a certain number of buyers due to the conditions the property they are buying must be in for a bank to loan on it.

Foreclosures are often sold at a greater discount than short sales and you normally receive an answer quickly (even in a day or two).

Foreclosures are great for people with larger down payments so the condition of the home is less important to the new buyer's lender and for people who have the funds to make the needed repairs.  They are also better for people who have little time or patience.  They are also ideal for investors due to the better discounts.  Since there is no owner involved in the sale other than the bank that owns it, there is no "owner pride" involved in the deal either, it's just straight business.

Of course every property, seller and buyer is different but this might help as a quick guide as to what type of discounted property is most likely going to work for you.

Buying and selling real estate in Miami-Dade, especially pre-foreclosure, short sale and foreclosure properties, has it's challenges but can be very rewarding.  If you are planning to buy or sell a property anytime soon, give us a call and we'll see what the best solution for you will be.  If you know someone who needs to sell a short sale, we'd love to hear from them as well!  Janie 786-252-4970


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Sara Homan
Coldwell Banker Ellison Realty 352-209-4044 - Ocala, FL
Realtor, Homes, Farms & 55+


Nice to see you again!  Short sales and foreclosures are truly the name of the game.  Donald Trump is not sitting on his hands in this market, I've heard he's buying real estate!!!  That's what true investors are doing.

Dec 13, 2008 05:20 AM #1
Janie Coffey
First Coast Sotheby’s International Realty - Ponte Vedra, FL
Uniting Extraordinary Homes w/ Extraordinary Lives

Hi Sara, great to see you also!!

our market has exploded with people actually finally buying, the prices are right for both owner occupants and investors, they just need to decide what kind of deal is best for them!  Hope all is well!



Dec 13, 2008 05:42 AM #2
Mike Jones
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) - Tucson, AZ
Mike Jones NMLS 223495


This is all I'm financing right now.  Short sales and pre-forclosures.

Mike in Tucson

Dec 13, 2008 02:53 PM #3
Janie Coffey
First Coast Sotheby’s International Realty - Ponte Vedra, FL
Uniting Extraordinary Homes w/ Extraordinary Lives

Hey Mike

That is all we are closing, mostly short sales (with both buyers and sellers).  I think here in Miami it is going to be that way for awhile with the inventory we have.

Thanks for visiting!


Dec 13, 2008 11:07 PM #4
Josh David
Bridgeview Bank Mortgage - Tampa, FL
Purchase Specialist...

Hi Janie, I see you are quite active on the short sale madness, and I simply wanted to offer solution for you; as this will help you grow your business to work smarter not harder.

I represent a company who negotaiates short slaes for all realtors and we can do this in any state. I currently have 6 active deals in to the title/escrow companies now, and I must admit, the process is very simplistic for both Realtors and myself.

I know as an agent you cannot like to negotiate the short sale, who would? If I can help you out in anyway shape or form, I would be delighted to do so.

O'yah one last thing, I also have a $100.00 down HUD program for new buyers who do not have any money to put down outside of the $100.00. I have a power point presentation on this if you are intersted? You can emal me for more info at your desire.

Happy Holidays Jannie,


Dec 14, 2008 01:34 AM #5
Gene Allen
Fathom Realty - Cary, NC
Realty Consultant for Cary Real Estate

Looks like prices are starting to get near the bottom where buyers are liking them to be.  Hopefully it will get going before the next wave of foreclosures hit.

Dec 15, 2008 06:28 AM #6
Kathy Torline
ERA Herman Group Real Estate - Colorado Springs, CO
Colorado Springs Real Estate Blog 719-287-1049

Great info.  Thanks for sharing!

Dec 17, 2008 10:57 PM #7
Jack Burns
Real Estate Now - Bellevue, WA

Check out www.ShortSaleNation.ORG. It's a FREE online short sale, self service tool for agents and their clients. You don't need to interact with anyone and you are in total control of your short sale.

Mar 13, 2009 05:59 AM #8
Keith Pound
Realtor, Auctioneer - Louisville, KY - 502-645-5950


Apr 04, 2009 04:32 AM #9
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Uniting Extraordinary Homes w/ Extraordinary Lives
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