Foreclosure & Short Sales - What's the Difference???
Posted by Todd Covington on Wednesday, September 21st, 2011 at 11:47pm.
We in the real estate community get asked often about the difference between a "short sale" and a "foreclosure," two terms used frequently these days in real estate discussions. Beaufort, SC, like most areas of the country, has seen its share of foreclosures and short sales in recent years.
A foreclosure involves the sale of a property which is owned by the bank, which seizes the bank because the previous owner defaulted on the loan. After the bank completes the foreclosure process, it will put the property on the market, either through an auction, or by listing the property with a real estate agent.
A short sale involves the sale of a property which is not bank-owned. But although short sales are not bank-owned properties, they will require bank approval for the completion of the sale, because the proceeds from the proposed sale are not enough to allow the owners to pay off the outstanding mortgage with the bank. The buyer and seller will negotiate the offer, and once they come to agreement, the offer will be submitted to the bank, which must approve the sale.
Let's take the recent short sale of a home in Walling Grove, a waterfront neighborhood on Lady's Island. The home closed for $379,000. Because it was a short sale, we know that the owner owed more than $379,000 to the bank. So, the owner was "short" on the payoff, and required the bank's approval to finalize the sale.
The home went under contract on Nov. 4, 2010, and closed on Jan. 5, 2011. A short sale may require many months to complete. It is not uncommon for a bank to take months to reach a decision about a short sale, and then decline the offer, leaving the seller to begin the marketing process anew, and the buyer to start his home search all over. It can be a very frustrating experience, and may not be right for buyers who must be in their new home quickly.
Short sales and foreclosures have touched just about all segments in Beaufort, from higher end neighborhoods like Habersham, Battery Point, Newpoint and Coosaw Point, to more affordable neighborhoods like Telfair, Royal Pines and Picket Fences.
If you have any other questions about the short sale process, purchasing a foreclosure, or the Beaufort, SC real estate market in general, please don't hesitate to let us know.
Posted on Wednesday, September 28th, 2011 at 1:15am.