How Do Bank Owned Homes Differ From Short Sales?
by Tai Gordon on May.25, 2010, under Investing
With such economic upheaval still ravaging the world money markets, many prospective homeowners are unsure if they should invest in real estate. With foreclosure rates near all time highs, finding a solid investment is not as easy as it seems. Many buyers end up wasting their time waiting for transactions because they are not completely educated on what they are waiting for.
How to define a short sale?
If a seller is forced to sell their home when they cannot possibly sell it for what they owe due to market conditions, that sale will probably have to be a short sale. This occurs when the lending bank is paid less than what they are due, leaving them “short” on their own note. Also, when you factor in the fact that they require both the seller and the lender to accept them, plus they can take months to get approved, you see why they are gumming up the real estate market.
The vast majority of people who are buying homes do not want to wait for months before they find out if they get to buy a home, so short sales are nixed from the list frequently.
What qualifies as a foreclosure property?
These types of home listings are awaiting a scheduled foreclosure date, but do not let that discourage you from trying to buy them. They are actually a much better investment to go after than a short sale because of the shortened response time in regard to the foreclosure date. They are still as undefined as a short sale because of the lack of a mutually accepted price but they are a better pursuit due to the shorter time frame for a decision.
Many times the lenders have decided to just let the foreclosure continue as scheduled instead of accepting a short sale offer on the property.
What makes a bank owned property?
When a foreclosure has been executed and the property is safely and clearly in the portfolio of the bank it can be sold to recoup the money the lender lost. Since every lien but the primary lien has been eliminated or satisfied, the lender who holds the title has much more flexibility in the terms and price of the property. As you can imagine, getting a response from a lender in this situation is much easier.
Given that this type of property is the easiest one to buy, it should be the initial pursuit of any and every home buyer in the real estate market today.
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