Foreclosures, Short Sale, and Bank Owned properties.

Do know the differences?

All term we are hearing about the current Idaho real estate market. We here the terms  Foreclosures, Short Sales, and Bank Owned properties, but understand the difference between them all is very important to you the Idaho home buyer. There are great buys available here in the south west Idaho area and we currently have the best Buyers Market that the real estate industry has seen in years, but as always let the buyer beware and informed!  

Property in Foreclosures:

A property in foreclosure is one where the owner is behind on their payments and the bank has issued a Notice of Default  and scheduled a date for a Trustees Sale.  During the time between the issue of the Notice of Default, and the trustee's sale, the homeowner can sell their home to pay off the loan, or take other measures to avoid the foreclosure.  At the Trustees Sale, the home is sold in a bidding environment, and the purchaser must pay for the home in cash or cash equivalent at the time of the sale.  There would be no time available to arrange for financing.  Another caveat to buying a foreclosure is that you also may be "buying" other liens or loans, so you need to take great care to know exactly what you are purchasing.  Many properties listed on the foreclosure list are listed for the 2nd or 3rd mortgages.  If you were to purchase a second loan on a property, you would still be liable to make the 1st mortgage payments against the home.  You also are liable to pay any tax and other liens as well.

Short Sale:

If a homeowner wants to avoid foreclosure by selling their home, but can't sell it for what is owed, a short sale may be available to them.  A short sale is where the bank agrees to accept less than what is owed when the home is sold.  In a short sale, the homeowner can accept your offer, but that does not mean it is a done deal.  The lender or lenders must also accept the offer as well.  This will become more difficult the more lenders that there are involved.  In most cases it takes several months for the contract approval to take place, so don't plan on buying a short sale unless you have 3 or 4 months at least for the process to take place.  You will have time when purchasing a short sale, to arrange for financing your home.  You should also be aware that even after waiting and negotiating the lender can accept new offers up to the day that the home closes and is funded by your lender.  What that really means to you the home buyer is that the day you were to close a new better offer could be submitted and accepted, the process would begin again.  So in the short sale process bring all of your patience, do your very best not to get to emotionally involved until your loan has funded and the keys to your new home are in your hands.