We are beginning to see more Short Sales and bank owned properties coming on the market here in Ocala.
First let’s understand the difference between a Short Sale and a Bank Foreclosure.
A Short Sale is actually a pre-foreclosure where the seller, who can not longer make his mortgage payments and owes more on the property than it’s worth, contacts the bank and the bank agrees to accept a lower payoff on the mortgage than the seller owes. Banks do this under the idea that they are going to lose money anyway and it might be cheaper to accept a lower pay off than go through the legal process of foreclosing and then have to sell the house.
A foreclosure is when the bank has already taken title to the property after the legal process of a foreclosure.
Although you might think this is a great way to buy a house for cheap, there are a lot of potential pit falls.
- Short Sales aren’t always the best deal. There are often homes just as well priced without the hassle or risk.
- When you make an offer, the bank may sit on it for a month or more while looking for better offers or just due to bureaucracy. You can’t be in a hurry to move because you just closed on a house you just sold and need a place to live.
- Even after accepting the offer, the bank can change it’s mind and start foreclosure and you can lose money spent on an inspection or survey.
- Short Sales and bank sales are sold “As Is”. You will have the right to do an inspection but the bank won’t make any repairs.
- Foreclosures may have sat vacant without any maintenance for a long period of time and are sold “As Is”.
- In a normal sale, here in Ocala, it is traditional for the seller to pay for title insurance. Banks often try to shift this cost to the buyer.
- Banks are hard to deal with because they don’t play by the same rules as a private seller. This is accomplished by adding clauses to the sales contract.
Before getting involved in one of these bank sales you should find a Realtor and look for an equally good deal from a private seller. If you want to pursue this method of buying a home any way, be prepared for a lot of hard work and frustration.