WHAT IS THE DIFFERENCE BETWEEN A SHORT SALE, PRE-FORECLOSURE, AND FORECLOSURE?
If you're considering purchasing one of these kinds of properties, it's very important to understand what these terms mean and how the home's status could affect its sale.
[ No. 1 ] SHORT SALE
A short sale is when the property owner owes more on the mortgage than the market value of the property and is asking the bank to accept a short payoff of the loan. A short sale may or may not be in pre-foreclosure, but the homeowner is asking the bank to let it sell the property for less than what is owed on the loan. If the lender is not satisfied with the sale price, the home is not going to close.
[ No. 2 ] PRE-FORCLOSURE
A home is in pre-foreclosure if a homeowner is more than 90 days late on the mortgage payments and the bank has begun the foreclosure process. A pre-foreclosure is a property in the process of foreclosure but is still legally owned by the owner. It may or may not be a short sale. Pre-foreclosure doesn't necessarily mean that the homeowner is underwater, and it doesn't guarantee that the home will be foreclosed on.
[ No. 3 ] FORECLOSURE
Foreclosure means the property lender has taken back the property for lack of payment. Buying a foreclosure is completely different from a typical home purchase. Generally, foreclosures are bought at auction sight unseen, meaning you could end up with a home in need of serious repairs. You don't have investigatory rights; you're buying a property as is. For someone who just wants to buy a home to live in, it's not a smart idea. if you buy, you assume all liens, IRS liens, and other mortgages possibly tied to the property
John Castelli Realtor
Keller Williams Realty Partners
a: 700 Busse Hwy. Park Ridge, IL 60068