Short Sale or Foreclosure (REO)...Better From Whose Perspective?
Ask a Realtor these days and many will tell you that they've had it with short sales. The banks take way to long to respond. The client gets frustrated and thinks the agent is inefficient, so the client moves on to find an efficient agent, when in fact the agent had no control over the banks response time.
As for a foreclosure (also referred to as REO=Real Estate Owned by a bank) they are not
necessarily easier to complete the sale, but they are usually a cleaner transaction with less issues
involved than a short sale.
In a short sale there can be past due loan amounts from more than one lender, the devaluation of the property, past due maintenance payments, possible legal fees, liens from the municipality and more. Where as in a foreclosure usually these are all wiped clean in the banks initial foreclosure sale.
Sometimes there is the short sale that made it all the way through the banks process and
the Buyer did not close. In that case it is an approved short sale and there is less of a time delay
to get to a closing.
We have worked short sales that sold in a week or a month (these were pre-approved or fall-thru's as I mentioned above). We have worked at the transaction for 3 months and as long as 6 months
and they fell apart only to have the property foreclose anyway.
Sometimes there is PMI (Private Mortgage Insurance) on a property. Sometimes the bank will foreclose anyway because they will get their money back through the insurance claim.
Patience of a Saint is required to buy a short sale. We've had many Buyers say they have it, only to walk away after not hearing back from the lender with any kind of response in as long as two months
There is risk and reward in everything. In a short sale if you have the patience and the bank is cooperative it is likely you will get a "good buy", possibly better than a Foreclosure, because once the bank has processed the foreclosed property and put it back into the marketplace, they have additional costs involved that they want to recoup such as legal fees, loan pay-offs, insurance premiums, homeowners fees, legal fees, brokerage fees and more.
Either way there is an opportunity with the NEW INVENTORY of properties in the marketplace.
Find yourself an agent with experience and knowledge to guide your through the maze and
bring your patience with you.
As Mom always said,,,Good Things Come to Those Who Wait. She also said a Watched Pot Never Boils, but that's another story!
