Short Sale versus Foreclosure

As unfortunate as it can be when homeowners fall behind on mortgage payments and must face the possibility of losing their homes, short sale and foreclosure provide them options for moving on financially. People often use these terms interchangeably, but they’re actually quite different, with varying timelines and financial impact on the homeowner. Here’s a brief overview of short sale versus foreclosure.

Short Sale

A short sale comes into play when a homeowner needs to sell their home but the home is worth less than the remaining balance that they owe. The lender can allow the homeowner to sell the home for less than the amount owed, freeing the homeowner from the financial predicament.

On the buyer side, short sales typically take three to four months to complete. Many of the closing and repair costs shift from the seller to the lender.

Foreclosure

On the other hand, a foreclosure occurs when a homeowner can no longer make payments on their home so the bank begins the process of repossessing it. A foreclosure usually moves much faster than a short sale and is more financially damaging to the homeowner.

After foreclosure, the bank can sell the home in a foreclosure auction. For buyers, foreclosures are riskier than short sales, because homes are often bought sight unseen, with no inspection or warranty.

If you have additional questions, give us a call at (702) 434-5200. Curious what your home is worth? Click here to find out! If you would like to look at all current properties, click here. You may also check other home buying related blogs here.

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