Buying a Foreclosure or Short Sale

Most people know what it means when a home is in foreclosure.  According to American Heritage New Dictionary, foreclosure is defined as the legal proceedings initiated by a creditor to repossess the collateral for a loan that is in default.  A foreclosed property, which is also known as an REO (Real Estate Owned), is a home that has been through the foreclosure process and the creditor now holds title.  Typically, these homes are priced at fair market value minus the cost of repairs (which can be significant).

A short sale differs in that the homeowner may or may not be in default on the mortgage but has provided extensive documentation that they do not have the financial resources to continue making payments on the loan, nor to pay the balance due at sale.  A short sale property may be in need of repairs but often not to the extent of a foreclosure.  Some homes may even be in move-in condition.  Short sales are generally priced slightly below market to encourage a quick sale. 

Buying a foreclosed home is much different than buying one that is being sold as a short sale and both transactions are a little more complicated than your average real estate transaction.  However, the financial rewards can be worthwhile if care is taken to make an educated purchase. 

What is a Short Sale?  More details on this important type of transaction.

Mistakes to Avoid When Buying a Foreclosure  Heed tips from the pros to make the best decision possible.

What is a Certified Distressed Property Expert?  Only a small percentage of Realtors have this important credential. 

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