A lot of prospective buyers are confused when it comes to the differences between a short sale and a foreclosure. A short sale is when a lender allows the owner of the home to sell that home for less than what the loan is worth. A foreclosure refers to a property that was taken over by the bank from the owners who were unable to stay current with the payments due on their property. For buyers both types of properties offer benefits; with a short sale a buyer can normally assume that the owner has taken care of the property; it just became too much of a financial burden for them. Buyers interested in purchasing a foreclosed property may have to perform some repairs, some larger than others; but the prices on foreclosed homes tend to be a bit lower and more affordable for first time buyers.
Sellers who are selling their home as a short sale are often allowed to remain in the home while they are trying to sell it. Short sales also offer sellers the ability to repair their credit faster than if their home was foreclosed. Being able to repair their credit sooner will enable the seller to find another home loan and purchase another home which will help improve their credit rating. Someone who has had their home foreclosed has a more difficult time repairing their credit and later qualifying for another home loan. They are also faced with legal and administrative fees that may accumulate during the course of a foreclosure proceeding.
Many lenders are allowing more and more sellers to use the option of a short sale. This ensures them that the home will not be sitting empty for months as the bank tries to sell it. If a seller remains in the home they are more likely to maintain the property in order to help it sell and provide them with the best price they can get. Lenders prefer having someone remain in the home instead of letting it sit and deteriorate for months until it is sold. Short sales are a way that both lenders and sellers can win, the property will remain in livable shape while it is being sold and it is one less property that the bank will have to deal with.
If you‚Äôre interested in finding a short sale or foreclosed property, contact a certified realtor and inform them of your search parameters and you will likely find many available options to look at. Keep in mind that short sales are being sold by the owner and not the bank, foreclosed properties are owned by the bank and may have been vacant for months. Your realtor will be able to tell which properties are which and how long they have been vacant.