Benefits of Buying Shortsale Or Foreclosure
When homeowners delay on their mortgage payments, lenders are often motivated to see the properties sold to new home owners. A short sale is an arrangement between the seller, the homeowner and the lender to sell the property less than the mortgage balance while foreclosures are legal proceedings necessitated by lenders in order to repossess properties in default and then attempt to dispose them off to the market . Depending on the type of a market, a short sale or a foreclosure may yield a jackpot. Whether short sale or foreclosure is the best relies solely on the homebuyers and his/her priorities.
“Home ownership is the cornerstone of a strong community.” ~ Rick Renzi
For those buyers who want to get the most out of their investments, they might want to know the pros and drawbacks of purchasing either type of the ‘distressed’ property.
Benefits Purchasing a Foreclosed Home
While buying a foreclosed home comes with numerous advantages, there’re few things you need to watch out for which might cause you a fortune. Mostly in foreclosure deals, the seller is delighted to sell faster and he will certainly give an offer below the market’s price. Other than catering for major closing costs and concessions, the seller will likely perform repairs. On the side of the homebuyer, the buyer can use regular mortgage for financing and he/she can obtain the desired inspections within standard contingency period. The seller carries the burden of providing all the legal documents required.
Benefits of Buying a Short Sale Property
In order to facilitate their purchase, short sales are normally priced lower than other properties in the market. Short sale houses are in good condition because it’s the seller’s initiative aimed at avoiding a foreclosure in order to avoid credit damage and to maintain reimbursements from lenders due to relocation. Buyers will likely not incur major repair costs & renovations on short sale properties. Moreover, they’ll find a house where landscape is well maintained and utilities are still running.
Comparison: Short Sale vs Foreclosure
Short sales attract bidding which might in turn force the house price to increase beyond the market value. Banks are normally slow in accepting short sale bids. Regulations from Federal Housing Finance Agency require lenders to approve a short sale within 60 days and this discourages many buyers. On the other hand, closing a foreclosure deal may not be easy when the seller refuses to negotiate a price below outstanding balance of the seller’s mortgage. In the case of pre-closure, the buyer is required to do all the inspections.