This short Distressed Property Buyer's Guide is an FAQ (Frequently Asked Questions) and will answer some of the most basic questions about buying a foreclosure, short sale, or other distressed property.  If you have other questions that are not answered here, please contact us and we'll be happy to discuss in more detail.

What is the difference between a Foreclosure, a Bank-Owned or Lender-Owned, and an REO?

Nothing.  All of these common terms refer to a property that the bank has essentially repossessed, and is now offering for sale.  By the way, the term "REO" stands for "Real Estate Owned", and it is a shorthand for the internal banking ledger where such a property would be found on the books.

What is a Sheriff's Sale or Foreclosure Auction? 

The Sheriff's Sale or Foreclosure Auction is the actual process where the property is taken from the homeowner and awarded to the top bidder in an auction format.  Calling it an auction might be stretching the point.  In many cases, the bank simply bids with their note, meaning that they bid the unpaid balance of the mortgage.  Since that's usually higher than the home's value, the bank generally gets the property without a fight.  Of course, now they own the property for the full value of the note, so they will be taking a hefty loss when they sell it. 

What is the difference between a Foreclosure and a Short Sale?

While a Foreclosure is owned by the bank, a Short Sale is still owned by the homeowner.  What makes it a Short Sale is that the homeowner is attempting to sell the property for less than the total of all of the loans against it.  In order for that to happen, the homeowner will be asking the bank(s) to accept less than the full payoff while still releasing a clean and clear title to the new owner.

What is a Pre-Foreclosure? 

If a home is a Pre-Foreclosure it means that one or more lender has filed foreclosure proceedings against the property.  These proceedings must be a filed a minimum of 90 days prior to the actual foreclosure date in Arizona.  However, in many (if not most) cases, the lender may extend the foreclosure date one time or many times prior to the actual foreclosure sale.  When buying a Pre-Foreclosure property, we are trying to "beat the bank" and complete the purchase prior to the bank executing the foreclosure.

Are all Short Sales Pre-Foreclosures?  And are all Pre-Foreclosures Short Sales?

No, but it often seems that way!  While the vast majority of short sales are also in pre-foreclosure status at some point during the process, not all of them are.  More and more homeowners are making a business decision to walk away from a home that is under water, even though their payments are completely up to date.  This is often called "strategic default".  In these cases, you can occasionally find a Short Sale that is not even behind on payments, and not in danger of foreclosure.  Likewise it's possible to find a home that is in pre-foreclosure status but which has equity at the sales price, and is therefore NOT a short sale.  So while it is easy for us to almost use the two terms interchangeably because the same property often has both labels attached, the fact is the two conditions can and do exist independently from each other.

 Aren't Foreclosures always in terrible condition?

Some are and some aren't.  It's very common for foreclosures to need light fix-ups such as paint and carpet, and perhaps some appliances and landscaping.  But there are certainly foreclosure properties that are beat to death, and others that are absolutely perfect and ready to go.  And while you may have heard horror stories about angry homeowners intentionally vandalizing the property before the bank gets it back, in truth, these are rare exceptions, especially at higher price points.

Are Short Sales usually in better shape than Foreclosures?

Yes, that's a fair statement, but there are certainly exceptions to the rule. 

Why buy a Foreclosure, Short Sale, or Pre-foreclosure home?

Because some of these can be outstanding values!  Again, there are always exceptions, but the bank that is involved is often very motivated to sell the property, and usually expects to get a little less than fair market value.  With that said, not all distressed properties are automatically priced like a bargain.  We always recommend due diligence and comparing what comparable properties have sold for.  The bank can and does make mistakes in pricing, both high and low.  The best bet is to let us help you to set a value on the property before making any offer.

More Reports Of Interest...


Home Page | Property Search | Buyers | Sellers | Renters | Investors | Retirement Real Estate | What Our Clients Say... | Free Reports | PDP Blog | What's My Home Worth? | Mortgages Today | Homeowner's Resources | Transaction Partners | About Us | Contact Us | Click on Your Favorite Zipcode | Search by Neighborhood | Find Your Dream Home | FREE Foreclosure Lists | FREE Short Sale Lists | Search the Full MLS | Sellers Request | Buyers Request | Request Info | Helpful Links | Home Buying Info | Free E-mail Property Updates | General Request | Why Select Me To Help You Sell Real Estate? | Why Select Me To Represent You When Buying Your Next Home? | Search 85086 | Search 85085 | Search 85024 | Search 85050 | Search 85054 | Search 85331 | Search 85377 | Search 85266 | Search 85262 | Search 85255 | Search 85260 | Search 85259 | Search 85268 | Search 85263 | Home Search Tips and Tricks | Distressed Property Buyer's Guide | Find Distressed Property Bargains | Thank you for your Inquiry! | Byron Short | Yvonne Short | Patty Bentley | Nancy Banchik | Laura Henderson | Lorelei Carter | Michelle Cruz
Site Map | E-Mail
CarefreeCave Creek


Logo
Pristine Desert Properties LLC
7450 E Pinnacle Peak Rd Suite 256 • Scottsdale, AZ 85255
Office 480-563-9511 •