The Difference Between Short Sale and Foreclosure

It only takes buying a home once to become familiar with the general process. Pre-approval, search, offer and acceptance, closing- this is what many are familiar with.


However, some people look to get out of this basic process in hopes of a better deal, particularly when looking for an investment property. If this is you, then you might be advised to look into a foreclosure or a short-sale. While these transactions both are similar in nature, they are also different, and it is important to know the difference between the two so that you can proceed with the one that works best for your unique situation.


Short Sale

In some cases, homeowners need to sell their homes even though they owe more to the bank than the home is worth. In these cases, they will likely pursue a short sale, in which they will negotiate a deal with their lender whereby their lender agrees to accept less money than what is owed to them. In this case, the owner will try to turn the house around in a sale quickly for however much they can get for it.


As a buyer, you can benefit significantly from this type of sale, as many times, it may seem that the home is listed at a discounted price due to the desperate nature of the sale. However, It is important to note that if you are hoping for a quick transaction, this may not be the best option for you. Because of the unique nature of the sale, and the extra people involved, the transaction can take significantly longer than a traditional real estate transaction.  Although, oftentimes the deal is worth the wait. In this sale, you will work with an agent to determine a fair price to offer by considering the values of similar sales in the area, and then you will work with a real estate attorney to keep you apprised of the short sale negotiations and closing terms.


Foreclosure

Some homeowners do not have the option of pursuing a short sale, and instead will have to move forward in the process of a foreclosure. A foreclosure will typically occur if the homeowner gets behind on their mortgage payments and the lender sues the homeowner to reclaim the home.  After multiple notices, the lender will begin the foreclosure process to repossess and, ultimately, resell the home.


As a buyer, you can benefit from this process, because the lender will likely be more interested in getting back what they’ve lost in the home than receiving the highest possible price point for it. The lender will typically want to get out from under the loan quickly, and therefore this process will likely move much faster than a short sale. Because of this, it is important to take all of the necessary steps to ensure that you are ready to move forward at the pace that purchasing a foreclosure demands.


Whether you think a short sale or a foreclosure is the best option for your next home purchase, it is important to recognize that neither of these avenues are traditional, and the processes may look a little different than you’re familiar with. It is important to hire experts in the field with extensive experience with these particular sales. Our experienced real estate attorneys have worked with both foreclosures and short sales, and they are happy to provide the expertise needed to assist you throughout the entire process. Contact Gurney Law Group today, to learn more about how we can make your next home purchase flow as smoothly as possible.

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