24 Sep What Are Short Sale, Pre-Foreclosure, and Foreclosures?
Short-sale, pre-foreclosure, and foreclosure; these terms are close, but there’s a great difference between the three. If you are planning to buy a house anytime soon, then you might want to become familiar with these terms.
What’s most important, you have to proceed with caution. If it comes to any of these three situations, it doesn’t look too good for you. Some of them can be solved – but others will leave you no choice but to move out.
Defining Short Sale
A short sale happens when the owner of the property owes more to his mortgage than the actual value of the house. With a short sale, he or she is asking the bank if they can accept a short loan payoff.
A short sale may be part of a pre-foreclosure – but it can also be before this stage occurs. However, the fact is that the owner is requesting the bank to let them sell the property for less than it’s actually owed on the loan.
Short sales are rather difficult to do since it’s not easy to find a buyer that will accept any price. Furthermore, even if the seller does get an offer on the sale, this doesn’t mean that the deal will go smoothly. The price may be low, but you can often reach the best deal by going this route.
Going on Pre-Foreclosure
A property is in pre-foreclosure when the owner has failed to pay anything for 90 days. At this point, the house is still legally owned by the owner – so the notice they will receive is actually a warning.
During the pre-foreclosing process, the bank will do nothing. The owner will be given three more months, during which time they will have a chance to save their property.
The bank doesn’t really want your house; they just want the money that they are owed. This is their way of saying “If you don’t pay up, we will get our money through other means.”
The End Game: Foreclosure
The foreclosure is literally the point of no return. Three more months have passed, and you still haven’t managed to pay up your debt. This means that the bank has no other choice than to declare you “default,” and sell your home. This will obviously send a great blow to your credit and the chances of purchasing another home.
A house sold during a foreclosure is nothing like a normal purchase. Generally, the houses are bought on the auction site, without being seen by potential buyers – which means that it might be in need of repairs. The buyer does not have any investigatory rights either – so they are getting the property exactly as it is.
Short sale and foreclosure mean that you are losing the house. Pre-foreclosure means that you still have a chance of saving your home.
If you manage to get the money before six total months have come to pass, then you can keep your home safe from foreclosure.