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July 31st, 2008 10:05 AM by David W. Welch
Wow! I was out showing homes this past week, and all but one that I saw was either a short sale or a bank owned property. I was looking in the $150,000 to $200,000 price range, in the south Orange county and Osceola county areas. I waslooking for pool homes too, which limited the search quite a bit. This seems to be the "sweet spot" for distressed properties. If you are looking for properties in this price range in our area, you should understand the difference between short sales and foreclosed properties.
First, the short sale or pre-foreclosure. If the owner is still responsible for the property, and it is going into foreclosure, you are probably dealing with a short sale. This means the owner and their real estate agent are trying to get the lender to accept less than the principle amount of the loan on the house. (ex the loan on the house is $225,000, but it is listed for $179,000). This sounds like a great deal for the buyer, but it requires the lenders approval which could take months. Let me rephrase that - it will take months, and there is no guarantee the lender will approve the lower price. Our experience in Orlando is that the banks will take at least three months to give you an answer on an offer. If the property has already had offers there may be a pre-negotiated price. This may shorten the time get a response, but not necessarily.
The foreclosure is a totally different animal. A foreclosure or bank owned or REO, sometimes listed as corporate owned property is now in the possession of the bank or mortgage company. They usually want it sold as quickly as possible. Often the pricing is very aggressive, and you may be able to get answers to your offer within one to two business days. Sometimes these homes can be in very rough condition, so have a thorough building inspection completed. This is true of the short sales too.