An Overview Of Traditional Sales VS Short Sales VS Foreclosures

If you have ever purchased a property before, you are probably aware of how a traditional sale goes through. It can go through an owner, or it will go through a realtor, where proper paperwork is filed with the transaction reaching its completion at escrow. However, there are a couple of other ways that people can purchase properties other than finding them on listings in the paper or online. There are foreclosures that people can purchase, as well as doing what are called short sales. Let’s take a look at the differences between these three different ways by which property can be purchased.

Traditional Sales In Real Estate

In a traditional sale of a piece of property, this will go through the standard procedures. There will be a property owner that is selling it. There will be a buyer that will pay cash or take out a mortgage for the property. The transaction will occur at escrow where money is distributed to the owner and any lenders associated with that home. The new homeowner will then take possession of that property and may be responsible for a mortgage through a bank. This is how it traditionally works. However, it is possible also to purchase houses that have gone through a foreclosure.

Foreclosures In Real Estate

If you are going to purchase a property that is in foreclosure, this is typically a home where the owner is not able to make their payments. When this occurs, they can lose the property, allowing the bank to take possession of the property and eventually sell it to recover their losses. These properties are sometimes very popular with investors because of the great discounts that they can get. The bank simply wants to get their money back on the loan that they are owed, and there could be a substantial amount of equity built up in these homes that are sold at foreclosure sales.

Short Sales In Real Estate

Short sales are similar to foreclosures in that the owner is unable to make payments. This may be the result of a flexible premium mortgage where the interest rates have gone up significantly. It may also be that the home has suddenly diminished in value due to a market drop, and the payments they are making are much more than the property is worth. Unlike a foreclosure where the lender is selling the property, the homeowner is doing this. They are simply trying to find a buyer that can pay off the mortgage and allow them to walk away. This can help the owner avoid a foreclosure, and is the last course of action that people in this situation will take before a foreclosure occurring.

Which Ones Are The Best Investment?

From the perspective of an investor that has the money to invest, it’s a simple matter of paying off the lender that is owed. Their only concern is the value of the property as it stands right now in comparison to how much the loan amount was that they had just paid off. For example, if there was a $200,000 mortgage on a property that is valued at $250,000, the investor can make $50,000 by flipping the property on their own or through a realtor. This is the type of deal that most real estate investors make, and many can be made through foreclosures and short sales.

If you do have the money to invest in real estate, it’s worth looking into. This does not mean that you cannot find good deals with traditional sales of real estate. However, some of the best deals that can be made are through short sales and foreclosures. If you can invest money in this way, and you can find someone to help you find the properties, and process all of the paperwork, this might be one of the best ways for you to invest your money.