SW Florida Real Estate Information

This is a great question that I get asked on a daily bases. There are two big differences. A property being sold as a Short Sale is still owned by the current home owner. They are in default on their mortgage and instead of being foreclosed on and ruining their credit more, they ask the bank to accept a short sale and take less then what is owed to the bank, it's the banks choice to take this or not and some banks are not offering this option anymore. A Bank Owned Property (BPO) or REO (Real Estate Owned) is a property that has already been foreclosed on and has been taken back by the bank and is being sold by them.

I have put together some pros and cons of purchasing a foreclosure or short sale property.

Short Sale PROs:

1. Depending on what stage the short sale process is in, some homes are often times in a move in ready condition (most home owners may still be living in the home which means the home is in better shape)


Short Sale Cons and things to think about before you purchase:

1. A short sale listed price is set most likely from the listing agent! The price you see has nothing to do with what the Lender will accept! Hopefully the agent did their home work and listed the property at current market value, because the Lender will get an appraisal and if the appraisal is higher then the list price, be sure that the bank will want that appraised value! They will not accept a lower price!

2. The Lender or Lenders have a process in order to forgive the sellers dept and the average time frame to get a response on an offer, can be up to 6 months.

3. If the current seller has more than 1 mortgage on the property, the short sale process can take even longer!

4. Sellers usually have no money to make repairs to the home and the lender will not repair anything either. So you will be purchasing the home ASIS!

5. Depending on what stage the short sale process is in, most often right before the property goes into foreclosure, some homes are often in a horrible condition! Like missing appliances, missing air conditioner units, all ceiling fans and lights missing, if the property has a pool the pool equipment may be missing, screen enclosures may need to be repaired or even replaced, walls may have holes in them, carpets may need to be replaced and so on. Remember you are purchasing this home ASIS!

Foreclosure/Bank Owned Pros:

1. Usually you can get a response to your offer within 24-72 hours. (In worse case within 7 days)

2. Price is generally below market value, sometimes way below, meaning you truly get an outstanding deal, but only if you do not have to sink a lot of money into it! Remember you are purchasing it ASIS.

3. The price on the listing is a price the bank will accept no guessing.



Foreclosure/Bank Owned Cons:

1. Some bank owned homes need TLC - New flooring, paint, missing appliances, missing air conditioner, missing fixtures and so on that were taken out by a angry home owners.

2. Since the prices are usually below current market value there are often times bidding wars, so be ready. Homes normally have multiple offers on them within the first few days of entering the market and the bank will only accept highest and best price.

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