Wednesday, July 08, 2009

Short Sale vs. Bank Owned Properties

Two very different situations, each with their own set of problems:

Short sale: Property is currently not worth the amount of all the loans the owner has against the property therefore it is being sold for less than owed and the bank has to say “OK”…sometime there is more than one loan with different banks and they all have to approve taking less money.

Problem: is that it will take the bank months to respond, they could respond with refusing to pay your closing costs or come back with an unfavorable counter offer at a higher purchase price, or they may never respond at all…ever. While you wait, the property could be taken back in a foreclosure or the seller could file bankruptcy and you will just be out of luck.

Bank Owned: The bank has already re-possessed the property from the former owner in a foreclosure proceeding, so the bank now owns the property and is selling it. Every buyer prefers this scenario because you will probably get a response within days and there is no question about what it will cost or when you can move in.

Problem: Since buyers prefer a “bank-owned purchase” to “short sales” there are usually multiple offers within days from bidders who are willing to pay over full price in exchange for peace of mind. Bidders who wish to bid must be quick and aggressive to get the property.