It is very unfortunate when homeowners fall behind on mortgage payments and must face the possibility of losing their homes. Once found in that position, short sales and foreclosures provide them options for moving on financially. The terms are often used interchangeably, but they’re actually quite different, with varying timelines and financial impact on the homeowner.
A SHORT SALE
A short sale comes into play when a homeowner needs to sell their home but the home is worth less than the remaining balance that they owe. Home owners that realize that their financial situation will start to place them behind on mortgage payments, take this active approach and discuss this option with their mortgage company. The lender can allow the homeowner to sell the home for less than the amount owed, freeing the homeowner from the financial predicament. In this situation the lender is placed in a position where they have to decide to either take a potential loss (since the property is worth less than the remaining balance on the note) or wait and potentially foreclose on the property. Short sales may not be as detrimental to a homeowner’s credit rating as a foreclosure is so it is an option worth looking into it if you or someone you know may be behind on mortgage payments. CLICK HERE and we can discuss the steps if you or someone you know needs help with their current home ownership situation.
On the buyer side, short sales typically take three to four months or even longer to complete after an offer has been accepted by the home owner. Above all, the lender will have to approve that offer as they could potentially loose money in the transaction. If you are a buyer currently dealing with a short sale offer, make sure to ask the listing agent if the listing is an approved short sale. CLICK HERE and one of the Nik Shehu Property Group agents can assist you in finding short listings.
Unlike short sales, foreclosures are initiated by lenders only once a history of non-payments by the home owner has been established. The lender starts the process of the foreclosure and ownership of the property is then transferred from the home owner to the lender (repossessed). Most of the time, lenders will list the property in an attempt to make back their investment but all depends on the market conditions. Foreclosures have a huge impact on an home owner’s finances and overall life. The foreclosure is kept on a person’s credit report for seven years therefore limiting their ability to purchase during that time. That’s why it is very important that you consult with a Real Estate Agent if you or someone you know is currently behind on mortgage payments. CLICK HERE for further assistance
On the buyer side, buying foreclosures can often present opportunities to buy properties at a discounted price. However, all depends on the market conditions. Just because a property is listed as ‘foreclosure’ does not mean that it is automatically a ‘good deal’. Just like a regular home seller, lenders often place listing prices on foreclosures in line with market values so it is very important that you consult with a Real Estate Professional if you are considering purchasing foreclosure properties.
Contact Nik Shehu Property Group for all the Real Estate questions you may have. CLICK HERE to read what people are saying about the service quality they received from Nik Shehu and Nik Shehu Property Group Agents.