Foreclosure and Short Sales

Foreclosure Pros and Cons

Buying a foreclosure is often faster than purchasing a short sale. Plus, buyers often can negotiate closing costs and price in foreclosure sales, Elaine Zimmermann, a real estate investor in Memphis, Tenn., told Bankrate.com. However, abandoned homes in foreclosure can deteriorate very quickly so the buyer may need to weigh the condition of the home and whether they want a fixer upper. Scarred walls and carpets and appliances that were damaged by the former owner are not uncommon in a foreclosure, says David Richardson, an inspector in the Detroit area who’s certified by the American Society of Home Inspectors.

Short Sales Pros and Cons

A short-sale home is still owned by the occupant, so it tends to be in better condition than a foreclosure, experts say. “The short sale is, in my opinion, far better than buying a foreclosure because the home is generally in better condition because it’s been occupied,” says Gwen Daubenmeyer, a certified distressed property expert with RE/MAX in Detroit. “The utilities have been maintained, usually the lawn is maintained, those kinds of things.” But short sales often can take a longer time than a foreclosure to close. However, the federal Home Affordable Foreclosure Alternatives program, may be able to help speed up the short-sale process since it has created a timeline to hold lenders accountable, but still “it’s not perfect by any means,” Daubenmeyer says.