Home sales usually fall into one of three main categories: traditional sales, short sales, and foreclosures. For buyers, each has pros and cons, though generally speaking the cheaper properties are short sales and foreclosures. But if you're a buyer, you need to keep in mind that these properties are usually cheaper for a good reason. The best route for you depends on your financial situation and your goals, especially whether you're buying the property live in or as an investment. Let's take a look, then, at traditional sales vs. short sales and foreclosures in Dallas - Fort Worth Texas
Traditional Sales
This is what most people think of first. Traditional sales involve a seller and a buyer who agree on a specific price for the property. While the seller may have their own reasons for selling, they are not being compelled by a lending institution, unlike in the cases of short sales and foreclosures in Dallas - Fort Worth.
Short Sales
In a short sale, the sale proceeds fall short of the amount owed on the property, hence the term "short." Since the seller needs the lender to approve the sale price, the process can be lengthy. However, short sales help sellers avoid foreclosure. For buyers who are patient, short sales can offer some great deals.
Foreclosures
If a homeowner misses mortgage payments, the lender can issue a foreclosure notice indicating that the property will enter foreclosure after 90 days. If the payments aren't brought up to date or an arrangement isn't made, the property goes to auction where individuals and companies can place bids, usually starting at a set minimum bid. Frequently, the lender will reclaim the property with the intention of reselling it.
Foreclosures can be attractive to buyers seeking good deals, but the complexities of these transactions can be quite daunting. The process can be particularly challenging because it involves people being forced to give up their homes. Homeowners are often pushed into foreclosure due to circumstances beyond their control, such as extended illness, job loss, or divorce.
Foreclosure can be a difficult experience for the homeowner but offers opportunities for deal-hunting buyers. One positive aspect for sellers is that they can exclude canceled debt from their income tax returns and are relieved of making mortgage payments. The entire process can take several months, and the house remains in their possession until everything is finalized.
Observations About Short Sales and Foreclosures
Short sales in Texas generally take much longer to close than traditional sales, involving complex documentation and extended negotiations between the seller and lender. When you make an offer on a short sale, it must not only be accepted by the seller but also submitted to and approved by the lender, who is taking a loss. If your offer isn't approved, you’ll need to restart the entire process. Consequently, short sales typically take three to six months to complete, while foreclosures usually close within 30 to 45 days of an accepted offer.
It's also important to note that short sale and foreclosure properties are often vacant for extended periods and can be in poor condition. These properties are usually sold as-is. However, if you're willing to invest in repairs and put in some effort, you can often find a great deal on these properties.
Traditional sales vs. short sales and foreclosures in Dallas – which option suits you best? The answer largely depends on your purpose for buying the property and your plans for it. It also hinges on your patience and readiness to handle a distressed property. In these scenarios, it's wise to rely on the expertise of a qualified real estate professional. We're here to offer the guidance you need. Call us today at (214) 296-2343!