Thankfully in the Austin market we are not seeing a huge influx of short sale or foreclosure properties, but travel a little further north or south to Pflugerville, Round Rock, Kyle or Buda and their presence is undeniable. But what exactly is the difference between a short sale property and a foreclosure? Both can be great investments, but can also require a lot of time and patience.
A Short Sale property is one in which the owners owe more on the property than today’s market will give them. The need to sell is eminent so they are forced to put it on the market at a loss. When an offer is received, the bank is notified and ultimately has final say whether or not it is accepted thereby forgiving the remaining balance of the loan. The process can be long an arduous.
A foreclosure is a property where the owners no longer own the property and the bank has taken over and now serve as the owners in lieu of the mortgage. Depending on the owners and the bank, the condition of the property can be anywhere from decent to severely damaged. All foreclosed properties are sold As-is and do not require a seller’s disclosure. I have been in some homes where appliances are missing, windows broken, and carpet & walls have been destroyed. Often times the property has been weatherized meaning electricity and water have been turned off. Foreclosed homes sometimes end up in an auction type sale. Auctions can be held online or on the steps of the Capitol building every first Tuesday of the month.