Which to Buy – Short Sale or Foreclosure?

Welcome back!

Whether this will be your first home, you’re a move-up homebuyer looking to take advantage of the market or an investor wanting to profit from the current Atlanta real estate market, you will likely come across numerous short sales and foreclosures. Which is the best option for you and which one should you target?

Before we jump into that, let’s quickly explain the difference. Short sales are also commonly referred to as pre-foreclosure homes. These are homes where the current homeowner is behind on the mortgage payments and is attempting to sell the property for less than they owe on it in an attempt to avoid foreclosure. A short sale is considered an alternative to foreclosure and is generally considered less harmful to the seller’s credit, job security, etc. At a certain point, if the bank is not getting paid, they will foreclose on the property. These then go to auction at the county courthouse steps, but most of them don’t sell at auction. Rather the bank pulls them back and re-markets them as foreclosures or REO properties.

So now the question is as a buyer, what is better? Foreclosures or short sales?

And the answer of course it that it depends upon you and the specific property.

In a short sale scenario, the bank is not party to the agreement, but the agreement is contingent upon the bank agreeing that they’re not getting all of their money.  A short sale can often take 2-3 months for the bank to respond as many homes have  a couple banks involved, not to mentione mortgage insurance companies and private investors. Whereas with foreclosures, the bank owns them outright and generally wants to sell them quickly and get them off their books.

So I’m sure you’ve gathered from above, if you’re looking to purchase in a short timeframe, foreclosures would be a better fit. The flip side to that is that foreclosures tend to attract more attention as buyers feel they’re getting a good deal and will wrap it up quickly. With a short sale, you can often get just as good of a deal, but you will need to be patient. Often being willing to out wait a buyer who is ahead of you initially.

In short, both short sale and foreclosure properties present good opportunities. Whether you are a move-up homebuyer, an investor or a first-time homeowner, keep your options open. You never know what you will find or how good of a deal you will get until you look.

If you would like assistance in finding great deals in Atlanta foreclosures and short sales, be sure to contact our team. We have area specialists throughout metro Atlanta that can help identify the best deals for you.