Foreclosures and Short Sales

For the right buyer, a foreclosure or short sale can be an excellent opportunity to buy a home at a much discounted price. So what’s the difference between the two and who should be buying themA foreclosure is a home which is bank owned. The property is vacant, and may or may not be distressed, but typically needs some work to make it comfortably habitable. When purchasing a foreclosed home, the bank is looking for a non-contingent offer, often which can close in a relatively short amount of time. Extra fees involved in purchasing a foreclosed home can be (but are not limited to): survey, de-winterizing a home and turning on the utilities in order to have an appraisal performed (unless you are a cash buyer), plus typical buyer closing costs. Most foreclosures can close within 45 days of signing the contract.

A short sale is a home which is still owned by the seller, but the seller owes more for the home than the home is worth. In this case, the bank has agreed to accept less than the full debt owed by the seller. When purchasing the home, the seller will sign the sales contract, but the agreement will not be firm until the bank has approved the price. This process can take anywhere from 60 to 120 days, plus more time to close on the loan. Additional costs can include repairs to the home prior to closing (for FHA loans), survey, and increased attorney fees to complete the transaction.

So who should be buying these homes? First of all, the buyer has to have some flexibility in terms of when they can close on and take possession of the home. They often need to be capable of some home repairs, or have money in the budget to hire professionals to do the work. Foreclosures and short sales can be terrific investment vehicles for buyers looking to be landlords or rehab homes to resell. In all cases, though, it is important to consult a knowledgeable Realtor to help determine which homes are good investment candidates.

The foreclosure and short sale market is complex and constantly changing. Needless to say, the information here is just the tip of the iceberg. Call or email Sue for more information and talk about whether these are good options for you.

Sue Pearce
J.W. Reedy Realty
1136 S. Main St. Lombard, IL 60148
Phone: 630-675-9979
Fax 630-629-0024

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