Monday, March 12, 2012

Which is the Best: Short Sale or Foreclosure Property

A short sale is any real estate sale where the proceeds due to the seller at closing will be insufficient to cover the amount owed plus closing costs and commissions. We bid more than a dozen short sale properties and luckily, we bought two properties which we love. After two years, hubby and I decided to buy another property listed either short sale or foreclosures.

Now, foreclosure is a legal process where a mortgage lender files suit against a homeowner for failing to make their mortgage payments as promised in the mortgage agreement. So, the question is, which is a better deal?
Foreclosures make up only 5% of the active listings, which is really sad for buyers like us. This type of property is sold quickly, due to aggressive pricing and quick response by the seller.
Short sales on the other hand would take months to sell and hard to close. The latest property that we bid was a short sale. We gamble and waited for days, weeks and finally, the mortgage bank gave their decision after 3 months. That's a waste of time and effort especially when they demand for a higher price. We had to walk away!

Short sale properties are usually listed very low. If you can buy a short sale property, you got a bang from your investment. Foreclosure properties are also a good buy but, start praying that there is no multiple offers. If that is the case, the higher bidder gets the property.

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