What’s the difference between a short sale and a foreclosure? If you’ve ever wondered this, I have the answer for you today.
Many people who are new to the market have heard they can get a great deal on a foreclosure and a short sale, but they may know what those terms mean.
A foreclosure is when a homeowner goes into default. This means they aren’t paying their mortgage loan back. The bank will take the home back and then relist it for sale on the market. We have access to all foreclosure listings and can guide you through the process of buying one.
“A short sale takes place when a homeowner goes into default on their mortgage but still owns the home.”
A short sale, however, is when a homeowner is in default, but still owns the home. They haven’t been making their payments for 30, 60, 90, or 120 days, so in order to stave off a foreclosure, they try to sell the home. However, since they don’t have enough equity in the home to pay off the entire mortgage, the homeowner must “short” the payoff. This process is a little more time-consuming than a foreclosure because you’ll have to get multiple parties to approve the sale; the bank will have to agree to accept less than the full payout on the balance owed. This can take 75 to 100 days to complete, and you may find a better property in that time.
For more questions about these topics, feel free to reach out to me. I’d be happy to help you.