Wednesday, June 29, 2011

The Better Bargain: Foreclosure or Short Sale?

Repost from: Daily Real Estate News | June 28, 2011 |

Short sales and foreclosures have flooded the housing market in recent years, and buyers are often drawn to the bargain prices but may be hesitant to jump into what usually is a difficult transaction and a long process.

Bankrate.com recently tackled the question of “Which to Buy: Short Sale or Foreclosure?” in an article that helps buyers weigh the pros and cons of a distressed property. Experts note that the question largely depends on buyers' situations, how quickly they need a home, and their tolerance for fixer-uppers.

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, or HAFA, may be able to help speed up the short-sale process since it has created a timeline to hold mortgage lenders accountable, but still “it’s not perfect by any means,” Daubenmeyer says.

From the desk of Dan Basil, The Basil Group:

Let's face it, it's been a tough economy this past few years and things happen to good people. We're hear to help with resources for you to make a wise decision when wading the unknown waters of what to do with your home when you're facing a financial struggle.

The Basil Group has resources that are at no cost to you to help determine your options if you owe more than your home is worth and need to sell your home. We have had success with working with many lenders and a lawfirm partner to help our clients shortsale their home. Call today for a private, no obligation consultation. (612) 280-5046

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