As we start to come out of this COVID-era and some recession, I think we’re going to hear a lot more about foreclosures and short sales. There is a difference between the two, so let’s focus on one today.
A short sale occurs when somebody is still in good standing with the bank, but the value of their home is less than what is owed on the home. As an example, they may owe $120,000 on the home, but it could only have a market value of $100,000. In order for you to be able to buy that home, that borrower or the owner of the home has to have a very cooperative lender. We like to work with local lenders, especially in a foreclosure or short sale situation, because they are the most likely to move things along smoothly. So if you’re thinking about purchasing a short sale, you need to have an understanding, cooperative lender.
Also, as we’ve talked discussed before, you must have patience in these types of situations because they do not happen quickly. You’ll be working with banks that have boards of directors that have to approve the sale, and they can sometimes take a long time. The bank is considering taking a loss on the home, so they aren’t going to make a quick decision. With those factors in mind, it is possible to successfully purchase a short sale. If you have any questions about short sales, foreclosures, or investment properties in general, contact us at (217) 422-3335.