What Is The Difference Between Foreclosure And Short Sale?

By Author: aliciajohnson
Total Articles: 10
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In most of the cases, it has been observed that people confuse the two terms that are foreclosure and the short sale. Both of these terms are used by legal consultants and they direct to different meanings. No doubt that both are linked to the people who take loans from the bank against their property and their loans turn to bad debt. In this case, bank is left with two options. The first one is to lock the house and sale it at its own. The second option that is somewhat better for people is regarding short sale. In this category, bank allows the owner to sale the house himself at the due cost. In most of the cases, a part of the debt remains unpaid even after the sale of the property. However, banks waive that money and declare the mortgagee as cleared from the bank dues.
Why foreclosures are cheaper than short sale houses?
It is a fact that foreclosures can be bought at relatively less cost when compared to short sale houses. The main reason for this is the bank’s interest in selling the property. Bank has to occupy the property and sale it to gain its money back from the mortgagee. However, the property remains ...
... a burden on the bank and bank tries to get rid of the property at any cost. This persuades bank to sale the property in cheaper rate. However, it is not so much beneficial for the buyer because a lot of repairs need to be done in foreclosed homes as they are sold on as it is basis and no assurances are given by the banks. It has been seen that some of the foreclosures need to be vacated by the buyers involving police and other security agencies and thus it is not beneficial to buy foreclosed homes.
Short sale houses on the other hand are sold by the house owner and he tries his best to sale the home at maximum price. In this way the customer gets a property that is free from bank pledges and disputes. The best feature of short sale houses is the assurance and no objection certificate that is issued to the purchaser by the bank. In a match between short sale VS foreclosures, it is believed that foreclosures are less beneficial for the buyers and they might create different problems for the buyer. The quality of the deal never gets cleared and thus a buyer can never be confident in his deal.
An analysis on short sale VS foreclosure shows that it is easy to buy the former one because it does not need to meet the legal requirements of the bank because home owner directly meets the buyer and settle the matters. On other hand, foreclosures involve banks and thus many legal requirements need to be met before buying the foreclosure and different hurdles keep on coming in your way while finalizing the deal for the foreclosed homes and property.