Buying or selling a foreclosure or short sale home can be complex. Because each situation is unique, understanding the buying process is critical.
Short sales, foreclosures and lender owned properties can be classified as non-traditional home sales. While they may provide the opportunity to buy real estate at reduced prices, these types of sales are complicated and take longer than traditional real estate.
Short Sale Homes
What is a short sale? The seller is asking their lender(s) to agree to take less than the amount owed on the home as payment in full. It’s considered a short sale when the sale price is insufficient to pay off the total mortgage(s) and costs of the sale.
Contrary to its name, a short sale home can be one of the most time consuming types of real estate transactions because the seller and lender(s) must agree to the terms of modifications of the seller’s mortgage obligations.
Learn more about buying a short sale home
Learn more about selling a short sale home
Properties in foreclosure represent an owner who has missed one or more mortgage payments and has received an official notice of foreclosure from their lender.
If you're a homeowner who is struggling to make mortgage payments, the Home Affordable Forelcosure Alternatives (HAFA) program or the Home Affordable Modification Program (HAMP) available from the federal government may be helpful options for you.
Learn more about HAFA and HAMP
Once the foreclosure process is complete, the property becomes lender owned. The seller is now the bank and the home is vacant.
Things to Consider
- Non-traditional home sales are more complex and potentially more time consuming because the lender is heavily involved in the transaction – either acting with approval powers or as the owner/seller.
- When entering into this type of real estate transaction, it’s critical to work with an expert who understands the market and can help you navigate the process.
- Liens or back taxes often create challenges with the property's title. Get more information about closing on a foreclosed property.
- Foreclosed properties may be previously owned by people experiencing financial difficulties and may require costly updates and repairs.
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