Looking for a good deal? Should you buy a short sale or foreclosure? They can be great deals and there are lots to choose from right now.
First, familiarize yourself with the lingo:
Short sales: A short sale is when a bank agrees to accept less than the total amount owed on a mortgage to avoid having to foreclose on the property. This is not a new practice; banks have been doing short sales for years. Only recently, due to the current state of the housing market and economy, has this process become a part of the public consciousness.
REO: Real estate owned by the bank/mortgage servicer, this acronym refers to homes that were foreclosed and repossessed by the former owner’s bank. It also signals that buying this property will involve doing a deal with the bank; possibly dealing with a different escrow timeline, offer process or contract forms than a non-REO sale; and almost always taking the place in as-is condition, among other things. Oh, yeah – and it might also involve one more thing: a great deal.
Making an offer on a short sale or foreclosure can be a very different process from that of a regular sale. It is best to work with a real estate professional who has experience with short sales and foreclosures and can guide you through the process.