Foreclosure vs. Short Sale
Two of the best ways to get a great deal on a home is pre-foreclosure purchase or a short sale.
A pre-foreclosure sale is when a homeowner has been given a Notice of Sale (NOS) from their lender. This means that the lender intends to sell the home because of non-payment of the debt.
The homeowner will often try to sell the house on their own to avoid foreclosure costs and damaged credit. Many times, they will hire a real estate agent to make the sale happen. You might also look in the local newspaper for the latest NOS.
A short sale is when the borrower owes more than the home is worth. The lender and the homeowner will advertise the sale in an attempt to avoid a foreclosure. The lender is willing to take a loss on the house in order to sell it at all.
Both of these methods of buying of house have some risks.
The first is that they aren’t necessarily quick ways to buy a home. The home is still occupied, so even if the sale is fast, there will still be time for the current occupant to move out.
The second is that we know that the homeowner couldn’t make the mortgage payment, it’s likely they couldn’t afford the maintenance of the home.
Both short sales and pre-foreclosure sales are great ways save money, if done with a bit of caution.