Buyers

Short Sale vs. Bank Owned – Which is better?

Along with purchasing a home from an existing homeowner, many people prefer purchasing a home from an owner that is in the process of being or has already been foreclosed on. Homeowners who get behind on their mortgages, unable to refinance or modify their loans for a lower payment, lose their homes. These homes are sold at a reduced value, providing a bargain for buyers. Let’s go into detail to explain the difference between a Short Sale and a Foreclosure, commonly known as a Bank Owned or REO (Real Estate Owned).

Short Sale

When an existing homeowner runs into trouble staying current on the payments with their mortgage, the lender may allow the home to be sold in a short sale. In a short sale situation, the bank agrees to let the home be sold for less than what the current owner owes on the property. The sale will be “short” of the owed amount. The sale amount has to be approved by the lender, a process that can take from three months up to a year or sometimes more. Do not mistake the amount of time for being short. This is generally a longer process.

Bank Owned Houses

A bank becomes the owner of a property once a homeowner defaults on the loan and the right of redemption period has expired. The house is foreclosed. This right of redemption varies from state to state. In Illinois, foreclosure takes a minimum of seven months. In a judicial foreclosure sale, the bank becomes the owner, allowing the institution to recoup any losses suffered from the loan default.

Buying a Short Sale

Purchasing a short sale home requires patience. During this process, the bank is attempting to get the highest amount for the house. The offer must be approved by the asset manager for the bank and lien holder and may take up to a year or more. During this time, a prospective buyer must watch spending habits and continue to keep their credit in good standing. If they do not, they risk losing the house, along with putting the sellers at risk to going into foreclosure.

Purchasing a Foreclosure

The purchase of a bank-owned property is similar to dealing with a homeowner. At this stage, the bank is simply selling the property to remove it from its books. The houses are usually priced lower than market value and there is a single asset manager assigned to oversee the sale. This asset manager is authorized to accept, counter or reject offers.

Which are Better? Foreclosures or Short Sales?

If a prospective home buyer is looking for a bargain but does not have an extensive period of time to wait for bank approval, then purchasing a bank-owned property is better. Bank-owned properties, or foreclosures) are sold ”as is,” meaning the bank is not responsible for any repairs, and any damage in the home will be the responsibility of the new owner. There are certain situation where a bank may allow for absolutely necessary repairs to be made. For those who wish to purchase a home where the current homeowner is still involved and able to relay any information on the home, than purchasing a short sale is the better option, although a longer one. For those of you that are willing to do some of your own repairs or obtain financing to have the repairs done through an FHA 203k or 203b loan, the foreclosure or bank owned is the route to choose.

Most Recent Bank Owned Seattle – Federal Way – Tacoma – Dash Point – Browns Point Foreclosures

Newest Short Sales in Tacoma – Seattle – Federal Way – Dash Point & Browns Point – Short Sales

Thanks for reading our Real Estate Blog!

Posted By: David Berg – Puget Sound Real Estate Agent

Office: 253-234-4289 Cell: 253-370-9449

Posted in Buyers, Foreclosure, Uncategorized | Tagged Browns Point Houses, Browns Point Re, Family Homes, foreclosure, foreclosures vs short sales, homes with water views, house with water views, Houses, Houses in Browns Point, houses in Seattle, houses in Tacoma, houses near puget sound, houses with water view, Puget Sound Real Estate, Seattle Foreclosure, Seattle Short Sales, shorst sales, Short Sale, short sales vs foreclosures, Tacoma Foreclosure, Tacoma Foreclosures, Tacoma Short Sales, What's a Foreclosure?, What's a short sale | Leave a comment

Housing market hits bottom in Seattle, Tacoma, Federal Way, Des Moines, Browns Point, Dash Point, Fife, University Place, Burien, Kent, Auburn, Redondo, Renton, Kirkland, Redmond, New Castle, Issaquah, and Bellevue.

News reports are saying that this is the year for the “bottom of the housing market”. They don’t counter in the fact that Western Washington has a significant increase in employment due to the latest Boeing contract. This strengthens the Seattle & Tacoma real estate market.

Keep in mind that it takes the average person 60 to 120 days to close on a home once they begin searching for their home! This means if you begin looking today, you’re not likely to close until sometime in March or May of 2012. This is the time to buy a home!

This will not be an overnight recovery, folks. Existing homeowners are not expected to see the price of their homes increase any significant amount for at least a few years. Several people in the following areas (Seattle, Tacoma, Federal Way, Des Moines, Browns Point, Dash Point, Fife, University Place, Burien, Kent, Auburn, Redondo, Renton, Kirkland, Redmond, New Castle, Issaquah, and Bellevue) are actually deciding upon a strategic Short Sale, rather than being faced into foreclosure, or some people have even gone for a strategic foreclosure, obviously not realizing what kind of damage this can cause to their credit. If you are in such a situation, it’s best to talk to a Realtor, licensed real estate agent, or real estate attorney about your options. Some people have hardships that they are not even aware of to allow them to qualify for a short sale. It is strictly on a case-by-case basis.

If you're underwater or upside down on your home, talke to a real estate professional, immediately.

My recommendation is that if you are underwater on your house, right now, and not sure of your options, you should speak to somebody that knows more about the current housing market and who would be able to advise you of your options. If you are curious about how to short sale in the Puget Sound area, be sure you’re looking for the best short sale experts possible, so you’re in good hands. If you have any questions, you can always contact us and we’re here to help in any way we can.

To sum this up, remember that timing the market can be a very difficult thing to do if you’re not factoring in housing inventory, closing times, or recent local changes in the market, such as rate of employment, housing starts, and the local economy.