Florida Real Estate Blog

They are both part of the Foreclosure process when a family can no longer afford their home. Yet there is a marked difference in the time it may take to successfully purchase the home. So let’s understand the differences.

Short Sale – this is a home that the family still owns and has stopped making payments on. They may still be living in it or they may have moved out and taken appliances and in some cases all the plumbing and electrical fixtures. This home is being sold by the Realtor for the family and the families Lender(mortgage) has to approve this sale as they will be receiving less money than they are owed (that is the reason it is called short sale).

These can take 3 to 4 months to complete and even then you may get to the closing only to find out that some of the documents the family’s lender is requiring them to sign is not agreeable to the family and they walk out of the closing. We have successfully sold and purchased these type homes for our sellers and buyers but do not recommend this opportunity to anyone that has a specific time frame that they need to be in a home.

Bank Owned – is exactly that, it probably was a Short Sale and it did not sell and the bank foreclosed on the property. In this case they can make a decision usually within two weeks and expect to close within 30 days once they accept your offer.

Both of these will expect a “proof of funds letter” from any cash buyer or a Pre Approval for anyone that is going to purchase with a mortgage. They will be selling AS-IS with a right to inspect (to be done within 10 days after acceptance of offer). As neither the seller or the Bank will put any money into repairs that may be needed.

So why go after these properties? They usually are the best priced properties in the neighborhood and they may actually pay up to 3% of your closing costs. They do not however sell at .70 on the dollar (i.e. 30% discount). In Seminole count lately they have been selling within 90% of asking. So a $200,000 home would sell some where between $180,000 and $200,000 and can have a multitude of buyers bidding on it.

This is a light read on this subject, much more can be found by going to Google and type in “Short Sale or Foreclosure”.