What are the differences between a short sale and foreclosure?

short-vs-foreclosure

If you’re considering distressed properties – short sales, REO homes, foreclosures, etc. – you may be overwhelmed by the terminology and wondering the differences between these types of sales. While they all fall under the “distressed” umbrella, there are differences in each of these types of properties. Here we’ll give you a rundown of the difference between short sale and foreclosure properties.

While foreclosures can happen for a variety of reasons, it most often occurs when the homeowner has stopped paying the mortgage and a notice of default has been filed in public records. The house goes in to foreclosure and, unless the payments are brought up to date, the home will sell to the highest bidder at public auction.

A short sale, on the other hand, occurs when a homeowner is in foreclosure but before the property goes to public auction. Under a short sale, a lender must agree to accept less than the amount that is owed on the property.

Unlike a foreclosure, it’s possible you may purchase a short sale for even less because you’re not paying off the existing loan nor making up the back payments. Buyers may be able to strike a deal with the existing lender to take less than so they can avoid dealing with a foreclosure.

Depending on their situation and end goal, both foreclosures or short sale properties can prove to be a great option for buyers. If you’re interested in checking out distressed properties in the Denver-metro area, give us a call. The experienced pros at Metrowest specialize in these types of sales and would love to work with you.

Ken Blevins

About Ken Blevins

Ken Blevins, CEO of Metrowest Real Estate Services, is a veteran in mortgage and default servicing with more than 24 years of experience in collections, foreclosure/bankruptcy, loss mitigation and real estate disposition (REO). Blevins was an original co-founder of Metrowest in 2003, a Real Estate Brokerage and Services Company focused on the resale, recovery and liquidation of distressed real estate in Denver, Colorado and surrounding metros. Blevins assumed the role of CEO in January 2014 and provides strategic direction and has management accountability for the day-to-day operations. Under his direction, Blevins drives all default management operations to maximize asset value recovery and reduce loss severity through a strategy focused on customer service and state of the art technology. Blevins has 18 years of direct operational experience in all facets of REO Asset Management having managed large national REO Disposition contracts for Fannie Mae, Freddie Mac, Wells Fargo, JP Morgan Chase, CitiFinancial, GMAC Mortgage and other various financial institutions. Blevins specialties include REO asset management, real estate investment, bulk REO acquisitions and distressed asset recovery and liquidation, and he has directed the resolution and liquidation of over ten billion in institutionally-owned residential real estate.

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