The Difference Between Short Sales And Foreclosures

There are several terms that get thrown around in the real estate industry that can be very confusing to those who are not familiar with them

. Speaking to a real estate agent can sometimes necessitate a translator. Of course, many agents are kind enough to put their daily jargon in layman's terms; however, it is nice to have a feel for the real estate terms so that interpretation is not necessary. Read further to learn some of the real estate terms and their meanings.

One will most likely come into contact with short sales and foreclosures if they have a home or are thinking of purchasing one. Those who are renting apartments will rarely hear those terms. To understand the difference between these two terms and their meanings, it is important to become educated on the basics.

Short sales end up happening when an owner of a home or property of sorts can no longer make the payments they had originally agreed to make. Usually in cases such as these, the home is worth less than the amount of the home loan that needs to be paid off. Usually, the owner is trying to sell off the home as quickly as possible in order to make amends with the source of the loan. Typically, houses that are in need of short sells can be bought for a relatively good deal since the homeowner will be anxious to get out of the property altogether. More often than not a short sale is done in an effort to avoid foreclosure.

Foreclosure ends up happening after the borrower has not been able to make payments for a relatively long period of time. When it comes time for a foreclosure, this means that the lending institution takes back possession of the home or property that the loan originally secured. Often time the banks will work with homeowners to set up payment plans to avoid foreclosure. Sometimes, though, there is little choice for the lender than to take back their property.

So what is the difference between short sales and foreclosures? In short sales, the homeowner is the one who accepts or rejects the offers. They still have control over the home although it is usually the first step to foreclosure. Foreclosures are homes that have been repossessed by the bank or lending institution that did not get paid the agreed upon payments. This means that those who want to purchase a home in foreclosure will have to work with the bank or lending institution directly.

by: Art Gib

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