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 Jacksonville NC.
Traditional Sales
This is what first comes to mind for most of us: traditional sales involve a seller and a buyer who come to an agreement on a price, and the seller voluntarily decides to sell the property. This could be for various reasons, such as upgrading to a larger home, downsizing, or relocating for a job. In a traditional sale, the homeowner has control over the timeline and the decision to sell, and the process is typically much more flexible. The seller is not being forced into the transaction by a lending institution, which stands in stark contrast to short sales and foreclosures in Jacksonville NC, where the seller may be under financial duress and facing pressure from lenders to either settle the debt or lose the property.
In a short sale or foreclosure, the homeowner’s situation is often dictated by their inability to keep up with mortgage payments, leaving them with limited options. The lender may require the home to be sold for less than what’s owed in a short sale, or it may seize the property in a foreclosure to recover its losses. These circumstances make the process far more stressful and less predictable compared to a traditional sale, where the homeowner is generally in the driver’s seat.
While traditional sales offer more freedom and control, for homeowners facing financial hardship, exploring alternatives like short sales or even working with professional buyers can offer a way out without the harsh consequences of foreclosure.
Short Sales
With short sales, the money from the sale isn’t enough to fully cover the amount owed on the property, hence the term “short.” Because the seller has to get the lender to approve the sale price, there is nothing short about the amount of time a short sale takes. What a short sale does is allow the seller to avoid foreclosure. For buyers who are willing to wait after making an offer, short sales can yield some good deals.
Foreclosures
If a homeowner fails to make mortgage payments, the lender can issue a foreclosure notice, signaling the start of the foreclosure process. This notice typically states that if the payments aren’t brought current or a payment arrangement isn’t made, the property will go into foreclosure after 90 days. Once this timeline expires, the property is usually taken to auction, where individuals and companies can bid on it, often with a set minimum bid. In many cases, if there are no qualifying bids, the lender will take the property back with the intention of reselling it, sometimes as a Real Estate Owned (REO) property.
While foreclosures often represent an opportunity for buyers to secure a property at a significant discount, the complexities of the transaction can make it a daunting process. The transaction is rarely straightforward, as it involves legal steps and may have unexpected complications. It can also become emotionally charged, especially when homeowners are forced to give up a property due to circumstances beyond their control, such as an extended illness, a job loss, or a divorce. In these cases, the homeowners often feel a deep sense of loss, adding to the stress of an already difficult situation.
Despite the emotional and financial toll on the homeowner, foreclosure can provide good news for buyers looking for a bargain. For the seller, though, there is a silver lining: they may be able to exclude the canceled debt from their income tax returns, offering some relief, and they no longer have to make mortgage payments, which can be a financial burden. The foreclosure process itself can take several months to finalize, and the homeowner generally remains in the property until everything is resolved, meaning they don’t have to vacate immediately. While it’s a tough situation, the opportunity to move on financially can be a relief for some sellers, especially if they take advantage of the options available during foreclosure, such as negotiating with the lender or opting for a short sale.
Observations About Short Sales and Foreclosures
Short sales in Jacksonville NC typically take a lot longer to close than traditional sales, requiring complex documentation and extended back-and-forth between the seller and lender. If you make an offer on a short sale, it not only has to be accepted by the seller but also has to be submitted to and approved by the lender (who is taking a loss). If your offer isn’t approved, then you’ll have to restart the whole process. As a result, short sales usually take three to six months to complete while foreclosures usually close within 30 to 45days of an offer’s being accepted.
Another important aspect to keep in mind is that short sale and foreclosure properties are often vacant for long periods and frequently in disrepair. In addition, these properties almost always must be purchased as-is. The good news here for buyers is that if you’re willing to invest a little in repairs and put in a little elbow grease, you can get a great deal on these properties.
Traditional sales vs. short sales and foreclosures in Jacksonville NC – which one is right for you? Again, it depends primarily on your purpose in buying the property, what you intend to do with it. It also depends on whether you’re willing to play the waiting game and are prepared to take on a distressed property. In such a situation, it’s best to lean on the expertise of a qualified real estate professional. And we’re prepared to provide the guidance you may need. Call us today at (516) 444-0840!
Interested in Jacksonville NC short sales or foreclosures? We can help! Contact us today for more information! (516) 444-0840