Home sales usually fall into one of three main categories: traditional sales, short sales, and foreclosures. For buyers, each has pros and cons, though generally speaking the cheaper properties are short sales and foreclosures. But if you’re a buyer, you need to keep in mind that these properties are usually cheaper for a good reason. The best route for you depends on your financial situation and your goals, especially whether you’re buying the property live in or as an investment. Let’s take a look, then, at traditional sales vs. short sales and foreclosures in Essex County.
This is what first comes to mind for most of us. Traditional sales involve a seller and a buyer who agree to sell/purchase the property for a specific agreed-upon price. Although there may be circumstances causing the seller to sell, she is not being forced into it by a lending institution, as is the case with short sales and foreclosures in Essex County.
With short sales, the money from the sale isn’t enough to fully cover the amount owed on the property, hence the term “short.” Because the seller has to get the lender to approve the sale price, there is nothing short about the amount of time a short sale takes. What a short sale does is allow the seller to avoid foreclosure. For buyers who are willing to wait after making an offer, short sales can yield some good deals.
If a homeowner fails to make mortgage payments, the lender can issue a foreclosure notice, which states that the property will go into foreclosure after 90 days. If the payments aren’t brought current or payment arrangement isn’t made, the property goes to auction where individuals and companies can bid on it (usually with a set minimum bid). Often, the lender will take the property back with the intention of reselling it.
Typically, foreclosures are great for buyers looking for good deals, but the complexities of the transaction can be pretty daunting. In fact, it can get downright ugly at times because people are being forced to give up their home. Owners are sometimes forced into foreclosure sales owing to things completely out of their control like an extended illness, job loss, or divorce.
Foreclosure can be painful for the homeowner, but good news for the deal-hunting buyer. The bright spot for sellers is that they can exclude canceled debt from their income tax returns, and they no longer have to make mortgage payments. The entire process can take several months, and the house is theirs until everything is finalized.
Observations About Short Sales and Foreclosures
Short sales in Essex County typically take a lot longer to close than traditional sales, requiring complex documentation and extended back-and-forth between the seller and lender. If you make an offer on a short sale, it not only has to be accepted by the seller but also has to be submitted to and approved by the lender (who is taking a loss). If your offer isn’t approved, then you’ll have to restart the whole process. As a result, short sales usually take three to six months to complete while foreclosures usually close within 30 to 45days of an offer’s being accepted.
Another important aspect to keep in mind is that short sale and foreclosure properties are often vacant for long periods and frequently in disrepair. In addition, these properties almost always must be purchased as-is. The good news here for buyers is that if you’re willing to invest a little in repairs and put in a little elbow grease, you can get a great deal on these properties.
Traditional sales vs. short sales and foreclosures in Essex County – which one is right for you? Again, it depends primarily on your purpose in buying the property, what you intend to do with it. It also depends on whether you’re willing to play the waiting game and are prepared to take on a distressed property. In such a situation, it’s best to lean on the expertise of a qualified real estate professional. And we’re prepared to provide the guidance you may need. Call us today at (978) 877-2873!