Do you know the difference between a Short Sale and a Foreclosure?
I find a many people do not know the difference between a "Short Sale" and a "Foreclosure". Here it is in a nutshell.
Short Sale, is still occupied in most cases by the seller. They are not able to continue to live in the property for many reasons. It could be health, lost their job, relocation anything. They also owe more on the property than it is worth in the current market. So they put the property on the market for sale. They ask their lender to take a reduced amount for the sale price should a buyer make an offer on the property rather than being forced into a "Foreclosure".
Foreclosure, is where the owners no longer own the property. In Michigan the owners have a redemption period of 6 months or a 1 year depending on the acreage and location to buy back the property from the lender or mortgage holder that purchased the property. Foreclosures are lender owned and the owners have not made the payments and forced out of the home for lack of mortgage payment. This too can be as a result of health, loss or job or family death, divorce. No matter the cause it is a sad day when a family loses their home for any reason.
One of the key issues to know about Foreclosures and Short Sales is the typically property condition of each. In many cases the Foreclosure will be in a lower state of repair. It is typically vacant and has been for a period of time without the routine maintenance of a homeowner present. Most Foreclosures will not have appliances available.
A Short Sale on the other hand has the homeowner still present. They are maintaining the property. They are trying to sell and keep the property in working condition. Many Short Sale sellers will offer their appliances to help generate the sale.
When buying distressed property it is a real asset to use a professional. You never pay a commission to have one of our professionals help you buy a Foreclosure or Short Sale property. We are authorized HUD brokers...we understand and help you avoid many of the pitfalls other buyers find themselves in when not represented.
Hope this helps you understand some of the differences between Foreclosures and Short Sales.