If you’re new to this website, I offer a weekly list of short sales in Fort Collins, Colorado. As an added bonus I recently added foreclosures as well. Below is a sample of the homes you’ll find in the email I send out.
View the Short Sale List: 38 Fort Collins Short Sales Week of 6/27/2011
View the Foreclosure List: 28 Fort Collins REOs and Foreclosures Week of 6/27/2011
Short Sale or Foreclosure. What’s the difference?
If you’ve been following the real estate market lately looking for a good deal on an undervalued property, you’ve probably run into the terms Foreclosure and Short Sale. That’s because both of these terms refer to property that is in some kind of distress. However, when it comes to making an offer there is a world of difference.
A short sale is a property in which the homeowner owes more to the bank/lien holder than the property is currently worth. Hence the term short sale, because the seller is “coming up short”. If the homeowner is unable to maintain their payments on their current mortgage they can offer the bank an alternative to foreclosure which is typically more costly for the bank and also more damaging to the homeowner’s creditworthiness. What happens is that the homeowner puts their home on the market near its current market value. Once an offer is received, they then take that offer to the bank and ask the bank to forgive the rest of the debt that they owe on the home. This allows the homeowner to be released from further debt obligation and allows the bank to take less of a loss than if they proceed with a foreclosure.
The problem with short sales however, is that often times the bank may take a long time to provide an answer to the buyer’s offer. When you write an offer on a short sale, you often need to be prepared to wait months before you hear back as to whether or not the bank has accepted your offer. A short sale is not the way to go if you do not have flexibility and patience.
A foreclosure on the other hand is a home that has been taken back by the bank/lender. At this point the home is vacant, and often times priced for a quick sale. However, many foreclosures typically need significant improvement due to their condition. Often when a homeowner was unable to maintain their mortgage payments, they were also unable to keep up with the maintainenance and lawn care necessary to keep your home healthy. These days, banks are realizing that if they put a little bit of work into the home they are seeing a much higher return on the sale than if they do nothing. If you find a foreclosure that you like and is in good condition, be prepared to act quickly if you need to. It typically won’t last long.