As you read in my initial post, this blog will serve as a wealth of information for both Parkland residents, and for those hoping to be such. After all, you must be one or the other . . . right?!?
As you may expect, an important topic and major emphasis of this blog will be the real estate market . . . both in general, as well as specific discussions regarding Parkland. Today, I will delve into that topic by introducing and explaining a couple all-to-familiar terms in our current market: Foreclosures and Short Sales.
There is a tremendous amount of confusion regarding foreclosures and short sales, and sometimes the misconception exists that they are synonymous. They are not, though both very much involve the bank.
A foreclosure is rather straight forward, in that it is simply a bank-owned property. Most often, it is the result of the previous owner’s failure to pay a mortgage for a significant period of time. The previous owner is forced to leave the property and no longer has ownership rights. A foreclosure is typically the bank simply exercising the terms of the mortgage and its right to “take back” the house due to non payment. Once this is done and the bank takes ownership of the home, it usually seeks to sell rather quickly. Banks do NOT want to be in the home-ownership business! Thus, foreclosures are often priced very aggressively. Unfortunately, they are also often in a state of disrepair.
A short sale is a bit different. In a short sale scenario, the home is still ‘owned’ by the individual and NOT the bank. Though most short sales do involve owners who are late or have missed several mortgage payments, the bank has yet to exercise its rights to ‘take back the home’ . . . its rights to foreclose. The reason a short sale is called such, is because the sale of the home will result in amount that is less than what is owed to the bank(s). In this scenario if a seller does not make up the deficit, the seller can ask the bank(s) to release the lien and allow for a sale without a full payoff. . . with a “short” amount. In a short sale, the seller generally does not receive any proceeds from the sale, but also usually does not “bring money to closing” either. It is important to note, however, that a short sale does NOT resolve the original note/debt. Receiving short sale approval from a bank is a very involved process, and one that can be rather time consuming. But most experts agree that a short sale is a better option for a seller than a foreclosure.
For buyer’s, purchasing a short sale requires plenty of patience. One should not venture into a short sale, either as a buyer or seller without an agent experienced in process, and perhaps legal guidance.
These are topics that could fill books… and probably have. I hope my simplistic description was helpful. Please fell free to post any questions or follow-up. We are confident that we have one of the best teams in the country in this relatively new aspect of our real estate market.
Until next time. . . .