Many prospective real estate buyers are looking for a “deal”. Most of them are speaking of distressed properties; homes that have been through the legal foreclosure process, are bank owned, and/or known as “short sales”.
To become a savvy buyer in this complex market, it’s crucial to distinguish between these terms, and they are quite different. Many buyers interchange the terms “short sale” with “quick sale”, and this couldn’t be farther from the truth.
The majority of short sales are technically “pre-foreclosures”, where the owner usually has a hardship, the mortgage payments are in default, and the lender has started the foreclosure process, sometimes filing a Lis Pendens (public notice of intention to begin formal foreclosure). Many lenders will not pursue a quick foreclosure if there’s a chance the real estate can be sold first, as foreclosure is the most expensive option for a lender.
The length of time a lender may allow a property to be sold as a short sale will vary from a few months to more than a year. The next step for an unsold short sale is foreclosure.
Foreclosure means title has been transferred to the bank holding the defaulted mortgage, through the proper legal channels, and is now owned by the bank as a non-performing asset.
These properties are usually vacant, or, in some cases, the bank allows a tenant to remain in the home until it can be sold.
So, what if you want to buy distressed real estate? Where do you start?
Stay tuned for my next blog. You can also visit my website: www.MyPinellasParadise.com
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