BUYER'S GUIDE SERIES: Foreclosures and Short Sales

Foreclosures and Short Sales: Navigating Potential Deals in Real Estate

When searching for your dream home or investment property, you may be drawn to foreclosures and short sales, hoping to score a deal. While they can offer potential savings, it’s important to understand that these “distressed” properties come with risks and challenges. In this article, we’ll break down what foreclosures and short sales are, how they differ, and whether they’re worth your time and investment.

What are Foreclosures and Short Sales?

A foreclosure occurs when a homeowner fails to meet their mortgage obligations, and the lender takes possession of the property. A short sale, on the other hand, happens when a homeowner owes more on their mortgage than the property is worth and the lender agrees to sell it for less than the outstanding loan balance.

While these properties may seem like a steal, buying them isn’t always straightforward.

Foreclosures: Potential Savings with Risks

Many buyers consider purchasing foreclosures as a way to snag a good deal. However, this can come with significant risks. If you’re looking at a foreclosure before it hits the open market—at an auction or sheriff’s sale—you’ll have little to no ability to inspect the property, and you’ll need to move quickly to secure financing. It’s a high-risk move with no guarantee of reward.

A safer bet is to focus on foreclosures that have been repossessed by the bank or lender and are now listed for sale on the open market. This way, you’ll be able to tour the property and assess its condition. However, don’t expect the lender to make repairs or offer credits if the property needs work.

Short Sales: Potential Savings with Patience

Like foreclosures, short sales may provide an opportunity to buy a home for less than market value. But, there’s a catch—short sales can take time. Lenders must approve the sale, and this process can be lengthy, often taking weeks or even months. Additionally, as with foreclosures, properties sold through short sales are typically sold “as-is,” meaning you’ll need to accept any issues the home may have.

Are Foreclosures and Short Sales Always a Good Deal?

Just because a property is a foreclosure or short sale doesn’t automatically make it a bargain. You’ll need to weigh the price against the potential repair costs and the time commitment. If the price is right, and you’re prepared to handle the risks, a foreclosure or short sale can be a solid opportunity. However, don’t forget to factor in the financial risks and uncertainty.

At Destination Real Estate, we can help you explore foreclosure and short sale options. We’ll guide you through the process with an open mind and realistic expectations. If you’re interested in these types of properties, we’ll ensure you understand what you're getting into—ensuring the deal is worthwhile for your time, money, and effort.

Looking for your next investment property or home? Let's talk! Reach out to us at Destination Real Estate today and explore all your options, including foreclosures and short sales.