What's the difference between a bank foreclosure and a short sale / pre-foreclosure?
Bank owned foreclosures and short sales are both ways to get a great deal on a property, but there are many differences between the two.
A short sale, also called a pre-foreclosure, is a home where the seller is generally having difficulty making the mortgage payments and is trying to avoid foreclosure. The seller is trying to get the bank to accept less than the amount owed on the property (selling it 'short'). Short sales tend to sell for less than regular market value of other properties. However, they generally take 3-6 months to close because the bank usually takes a while to determine the price that they will accept and there is a good deal of paperwork required too. If you are interested in purchasing a short sale, you can make an offer without putting any earnest money down in most all cases. Often there are multiple offers. With offers the goal is to get into first position because you are then in the driver's seat when the bank decides to either take your offer or counter. If the buyer in first position decides to not purchase the property by the time the price is approved, then the backup offers will take priority. Sometimes a short sale will be on the market too long and all buyers will walk away but there may be an approved pricec. If a short sale has an approved price and no offers on the table you can swoop in and purchase the property quickly in most cases. Much of the time you can be in the property within 30 to 45 days if the price is approved.
A bank owned foreclosure, also called an REO (which stands for Real Estate Owned), is a property that has already gone to foreclosure and is owned by the bank. To buy a bank owned foreclosure, you can make an offer and generally you will get an answer from the bank within a 2-7days, and the sale can close relatively quickly. Cash offers usually close within 14 days or sooner. If you have a loan the closing date usually comes down to how long it will take your lender to be ready to lend on the property. Foreclosure properties tend to be very competitively priced and thus they sell quickly, so you usually have to act quickly in order to be able to purchase one in good condition. Sometimes there are multiple offers submitted, and the bank will ask for 'highest and best,' meaning that everyone submitting offers will submit their best offer and the bank will choose whose offer to accept.
If you would like to see the foreclosure listings on our site, they can be found on the right side of the home page of UtahForeclosure.us. The short sale listings are found in the middle of the home page and are organized by city.
We are happy to answer any questions you may have about purchasing a foreclosure property. Feel free to call or email with questions you have.