Understanding the Difference Between a Bank Owned Home and Short Sale
Lots of qualified buyers have decided this is a great time to buy a home as prices are a fraction of what they were a few years ago.
This is a very good time to consider the possibilities of finding the perfect home for a great price.
If you are looking into buying and it seems that the best deals out there are Bank Owned and Short Sale homes you are not alone.
These homes are the driving force in bringing sellers prices down to even get any traffic much less an offer.
It is a "buyers market"and sellers are feeling the pain.
A Bank Owned home is exactly what it sounds like.
The owners defaulted on their loan and missed so many payments and the bank foreclosed on them, vacated them and now owns the home as collateral to the loan that was not paid off.
What happened is the owner borrowed a certain amount of money to purchase the home and then was unable for any number of reasons to continue the payments and basically were either forced or walked from the home and their loan.
We are seeing too much of this in today's market and unfortunately, homeowners think this is an answer to the fact that they may have paid more for the home than the guy next door paid.
This is NOT an answer and our laws do not have a penalty on taxes or any other financial obligation for homeowners that simply buy another home and walk from their current one.
This is hurting the market even more than the people really hurting and unable to continue their payments.
We should be ashamed of ourselves if we even consider this to be an answer and too many people who are well qualified are doing just that.
Actually, buying another property as they qualify for both and letting the bank take the higher priced one away.
Thus, making the first home now a Bank Owned Property and selling for a fraction of what is really owed and the bank taking the hit.
A Short Sale is a homeowner that is either upside down on their home (owing more than it is currently worth) and unable for whatever reason to continue to make the payments.
Much of this was caused by the high interest ARMS and balloons that lenders gave to buyers a few years ago, especially buyers who really should never have qualified for this large of amount in the first place buy our lending rules were far too lax.
This borrower is working with the bank to get the home sold for say 70-80% of what is owed and NOT let it go into foreclosure.
This is someone who is legitimately trying to work with the lender in it not becoming a foreclosure.
Unfortunately, because there are so many of these loans and it takes an offer before the bank can even consider taking a portion of what is owed to them a short sale actually should be called a "long sale" as they take weeks and even months to get an agreement to an offer from the lender.
This is driving buyers absolutely crazy and many end up moving on and either buying from a homeowner or a bank owned.
If you are looking into a short sale possibility you MUST be patient, there is nothing that either your real estate agent or the sellers agent can do to speed up the process except by constantly staying on top of the bank and this usually gets them nowhere.
If you need to be in a home in a reasonable amount of time you may not want to consider a short sale.
This is a very good time to consider the possibilities of finding the perfect home for a great price.
If you are looking into buying and it seems that the best deals out there are Bank Owned and Short Sale homes you are not alone.
These homes are the driving force in bringing sellers prices down to even get any traffic much less an offer.
It is a "buyers market"and sellers are feeling the pain.
A Bank Owned home is exactly what it sounds like.
The owners defaulted on their loan and missed so many payments and the bank foreclosed on them, vacated them and now owns the home as collateral to the loan that was not paid off.
What happened is the owner borrowed a certain amount of money to purchase the home and then was unable for any number of reasons to continue the payments and basically were either forced or walked from the home and their loan.
We are seeing too much of this in today's market and unfortunately, homeowners think this is an answer to the fact that they may have paid more for the home than the guy next door paid.
This is NOT an answer and our laws do not have a penalty on taxes or any other financial obligation for homeowners that simply buy another home and walk from their current one.
This is hurting the market even more than the people really hurting and unable to continue their payments.
We should be ashamed of ourselves if we even consider this to be an answer and too many people who are well qualified are doing just that.
Actually, buying another property as they qualify for both and letting the bank take the higher priced one away.
Thus, making the first home now a Bank Owned Property and selling for a fraction of what is really owed and the bank taking the hit.
A Short Sale is a homeowner that is either upside down on their home (owing more than it is currently worth) and unable for whatever reason to continue to make the payments.
Much of this was caused by the high interest ARMS and balloons that lenders gave to buyers a few years ago, especially buyers who really should never have qualified for this large of amount in the first place buy our lending rules were far too lax.
This borrower is working with the bank to get the home sold for say 70-80% of what is owed and NOT let it go into foreclosure.
This is someone who is legitimately trying to work with the lender in it not becoming a foreclosure.
Unfortunately, because there are so many of these loans and it takes an offer before the bank can even consider taking a portion of what is owed to them a short sale actually should be called a "long sale" as they take weeks and even months to get an agreement to an offer from the lender.
This is driving buyers absolutely crazy and many end up moving on and either buying from a homeowner or a bank owned.
If you are looking into a short sale possibility you MUST be patient, there is nothing that either your real estate agent or the sellers agent can do to speed up the process except by constantly staying on top of the bank and this usually gets them nowhere.
If you need to be in a home in a reasonable amount of time you may not want to consider a short sale.