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foreclosure vs. short sale for a buyer.. What is the differences between the two for a buyer.?

I am in the market for a new home and I see the many bank owned and short sale properties. What is the difference to me as a buyer. What would the benefits of buying one vs. the other., which one of these can I get a better deal on? Any other tips or things to what out for?

Public Comments

1. With short sale, the owner is working with his bank to sell home at less than what he owes on home with foreclosure, the bank has taken the home away from the owner because he defaulted in his mortgage obligations This is taking advantage of the misery of others. . .don't forget that in your quest for a bargain These deals frequently take longer to work out details and to close because of extra parties involved
2. foreclosures are an easier closing, since at that point the bank has taken back the property and such you are dealing directly with the bank, down side of foreclosures is the disclosure, the bank does not have personal knowledge of any material defects in the place thus you need to do your due diligence in inspecting the house Short sales: are harder to close and in the end majority of short sales do not come true and the lender ends up foreclosing on the property. See in a short sale, the seller places the home for sale at a price they feel the market will bare, this does not mean the bank must accepted the short sale, so what happens is you find a short sale you like, make an offer, it goes to the bank who must signed off this can take months to sign off, and they may in the end decided that is better to let the place go into foreclosure and collect the insurance on the note then approving the short sale number, so after of months trying to close on the short sale, you deal is dead because the lender refuses the number, also if the house has a second note and trying a short sale the chances are even less
3. When you buy a home in foreclosure you are buying the home as is. You may NOT have any contingencies in your contract. What you see is what you get. Make sure you have a home inspection so you know exactly what you are buying - repairs and all. Here sellers are no longer in the home and could have been vacant for a long period of time. A short sale occurs when a mortgage servicer agrees to accept less than they are owed for an outstanding loan. When you purchase this type of home you are purchasing it prior to the foreclosure. The advantage here is that the people probably are still living in their home and trying their best to maintain the property. Depending on the age of the home, less repairs might be in your future. Again, no contingencies would be possible in this type of purchase. ( Here the current owners might have to come up with the difference between their sale price and what they owe the bank. If the owner had an interest only loan, the bank might not accept anything other than what they are owed.) Hope that helped. Good Luck
4. You can readily buy REOs (properties that have been foreclosed and are now owned by the bank). Banks list them for sale through realtors. Just make sure that you carefully check out the property conditions first. Short sales are very difficult - they say that 85% of short sale attempts never go through. As a buyer, be prepared to wait months for an answer to your offer. If you can't afford such a wait, skip the short sales.