There are a number of different ways to affordably purchase property below market price, including foreclosed properties and short sales. Pre-foreclosure homes are also a great alternative to consider. However, understanding the difference between the multiple methods of becoming a homeowner is essential to getting the best bargain and avoiding unnecessary fees or stressful situations.
Learn everything you need to know about the essential similarities and differences between short sale properties and foreclosed homes in order to easily discover the property of your dreams and become one step to becoming a happy homeowner.
What Is the Difference Between a Short Sale and a Foreclosure:
While short-sale homes and foreclosed properties initially seem to share many similarities, there are a few key distinctions between the two types of properties. To begin with, a short sale occurs when owners own more mortgage than the property value of the home. While in some cases, owners might have missed mortgage payments, these properties are short-sale when the homeowners ask banks to accept less money than the loan itself. When considering a short sale property, buying can take longer due to bank approval; however, buyers are likely able to inspect the home ahead of purchase.
In comparison, foreclosed properties occur when the bank steps in to claim the property. This occurs when homeowners cannot pay back their mortgage or have missed multiple mortgage payments. Foreclosure can also occur when owners have not paid taxes and owe money to the government. When purchasing a foreclosed home, prospective buyers generally do not have the chance to tour the home.
What are Pre-Foreclosure Homes:
Pre-foreclosure homes are properties where the owner has received notice of default. While these types of homes are not quite considered foreclosed properties, foreclosure is soon approaching. Pre-foreclosure homes are technically still the property of the original owner and no set deadline is given on when the ownership will transfer to a bank, and therefore, be open for purchase from interested buyers. Information about pre-foreclosure homes can be found listed on various different online platforms. Doing research on a pre-foreclosure home ahead of time can help you determine if the property is worth investing in once it is officially foreclosed.
How to Find Foreclosure Listings:
If you’re searching for foreclosed properties to purchase, there are a number of methods you can use to find your perfect home. Many different foreclosed properties can be found through online platforms. In fact, browsing Zillow pre-foreclosure home listings is a great way to find a property that is affordable and still accessible for prior research, unlike attending a foreclosed homes house auction. Realtors might also have access to foreclosure listings that buyers can view. Local papers might also announce housing auctions where buying a foreclosed home is easy —and inexpensive. However, keep in mind that there are a few associated risks with bidding at housing actions. If you’re new to bidding at housing auctions, be sure to check out this comprehensive guide on purchasing foreclosed ahead of time.
Short sales, on the other hand, are generally listed by a broker. Working together with local realtors is often the most effective way of scouting prospective short-sale properties. Similar to foreclosure listings, there are a few online sources to find short-sale homes, such as on multiple listing services (MLS) or local websites; however connecting with real estate professionals is generally the best method.
Buying a Foreclosed Home Tips & Tricks:
Interested in buying a foreclosed home or browsing foreclosure listings in order to find the affordable property of your dreams? If so, then be sure to carefully follow these foreclosed home buying tips in order to make your journey towards becoming a homeowner safe and stress-free.
- Bring Cash: If you’re searching for foreclosed homes at housing auctions, cash is a must-have.
- Complete Inspections: Whenever possible, inspect foreclosed homes with a professional inspector to avoid costly repairs
- Real Estate Agents: Oftentimes, housing professionals have access to the best foreclosure listings. Work with a realtor to find the best home to suit your needs.
- Know the Difference: The process of buying a foreclosed home compared to pre-foreclosure homes is quite different. Do some research and be prepared for the difference in searching and purchase time.
Buying a foreclosed home or a home listed as a short sale is a smart way to become a property owner without breaking the bank. By understanding the key difference between different types of discounted homes, you can more easily discover the perfect property for you. Whether you’re looking at Zillow pre-foreclosure homes or checking out MLS foreclosure listings, get started today on finding a property you can call home.
Not sure where to begin? Check out these how-to guides on foreclosed homes or contact a professional real estate agent, here!