Short Sale versus Foreclosure: What's the Difference?

Many people are interested in the possibility of buying a "foreclosure" - but not all foreclosure homes are the same.

Some homes are in the process of being foreclosed on by the mortgage company. If a sales contract is presented to the mortgage company for less than the seller owes, then the home is considered a "short sale". The seller is still the owner at this point, and the seller negotiates and signs the real estate contract with the contingency of final bank approval needed.

If the home has already been foreclosed on, the mortgage company or bank is now the owner. This is commonly referred to as an "R.E.O." - real estate owned by the bank. The former homeowner is gone and the house is vacant.

In the Northern Illinois area, if the bank is now the owner, it is easier to put a deal together and the sale can close in a shorter time frame of 30 to 45 days.

Jim Starwalt

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Jim Starwalt, Broker Associate RE/MAX Center, Phone: 847-548-2625 Jim@StarHomeFinders.com