For a Private and Confidential consultation on selling your home as a Short Sale to avoid Foreclosure, or on buying a home in a short sale, contact Judy Spear at 720-771-6075. Email: judy@spearteam.com

What is a short sale?

A short sale occurs when the net proceeds from the sale of a home are not enough to cover the sellers’ mortgage obligations and closing costs, such as property taxes, transfer taxes, and the real estate practitioner’s commission. The seller is unable to cover the difference.

Some — although by no means all — short sellers may also be in default on their mortgage loans and be headed for foreclosure. However, home owners who bought at the top of the market or who took out large amounts of equity with a refinance and who now need to sell because of divorce, job loss or job transfer may also find themselves upside down, owing more than the home is currently worth when closing costs are factored in.

Short sales are a waiting game. The buyer will need to be patient in most cases as the seller's mortgage lender requires a period of time to review offers and to value the property, usually 60-90 Days. Most mortgage banks will not review a property for short sale approval process until an offer is actually received.

Why buy a short sale?

Unlike a foreclosure, buyers typically are able to buy the home for even less than they would a foreclosure because the bank is willing to accept less than the amount owed on the current mortgage(s). All of the seller closing costs, including agent commissions, are paid by the bank(s).

How to buy a short sale?

Hire a REALTOR with short sale experience – Judy Spear of Spear and Company. It's one strike against you if the listing agent has never handled a short sale, but it's even worse if your own agent has no experience in that arena. You need an experienced short sale agent. Judy has been selling Short Sales for over 11 years and has a 95% success rate in getting the transaction approved and completed! (The bank statistics show that only 20% of the short sales applied for actually get appoved.)

An agent like Judy with experience in short sales will help to expedite your transaction and protect your interests. You don't want to miss any important detail due to inexperience or find out your transaction is not going to close on time because no one has followed up in a timely manner.

What is an REO?

An REO is real estate owned by the bank, and many investors consider an REO property to be money just waiting to happen. An REO is different from a foreclosure property in that the bank has already tried to sell it at a foreclosure auction and has had no luck getting bids. Because the property was not bid on, the bank then became the owner of the property. Naturally, the bank does not want to keep the REO any longer than possible, and this makes it a great opportunity for an investor. Not every REO is a good deal, but when you look at an REO you’ll commonly find that there is a lot of money to be made.

So, is an REO a foreclosure?

Technically speaking, the home was foreclosed on because the owner of the home failed to make their scheduled payments. The bank set up and went through a public foreclosure sale, but there were not any bids placed on the home, so the bank ended up owning the property. Yes, the home was foreclosed on, but it is well past the foreclosure process and the bank will be anxious to get rid of the property.

Advantages of REO vs. Public Trustee Sale Property

When you are thinking of buying an REO you have two distinct advantages that a buyer does not have with a property purchased at the Public Trustee Sale. The first is that you are able to buy on your schedule without the 60-90 day waiting period of a Short Sale. It is handled in the traditional manner of a normal sale. You can make an offer at any time and expect a normal closing period. Another big advantage of an REO compared to a Public Trustee Sale property is that you can inspect it before you buy, when you cannot do this with the majority of the Public Trustee Sale homes that you think about purchasing. Being able to inspect the property before you buy will let you know how big of a project you will be dealing with. Also, you can work with a lender to obtain a loan to purchase an REO property. Whereas, purchasing a property at the Public Trustee sale requires cash/available funds to be paid at the time the home is purchased.