Home sales usually fall into one of three main categories:
- Traditional sales
- Short sales
For buyers, each has pros and cons. 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 less expensive for a good reason. The best route for you depends upon your financial situation and your objectives, especially whether you’re buying the property to live in, as an investment, or some combination of the two (such as a house-hack).
Let’s take a look at traditional sales vs. short sales and foreclosures in Boston.
This is what first comes to mind for most of us. Traditional sales involve a seller and a buyer who agree to sell/purchase the property for a specific agreed-upon price. Though there might be circumstances causing the seller to sell, he is not being forced into it by a lending institution, as is the case with short sales and foreclosures in Boston.
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, ironically the time involved to complete a short sale might be quite long. 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 excellent deals.
If a homeowner fails to make mortgage payments, the lender can issue a foreclosure notice, which states that the property will go into foreclosure after 90 days. If the payments aren’t brought current or payment arrangements are not made, the property goes to auction where individuals and companies can bid on it, often with a set minimum bid. Frequently, the lender will take the property back with the intention of reselling it.
Typically, foreclosures are great for buyers looking for good deals, but the complexities of the transactions can be pretty daunting. In fact, it can get downright ugly at times because, unfortunately, people are being forced to give up their homes. Owners are sometimes forced into foreclosure sales as a result of circumstances entirely out of their control, such as an extended illness, job loss, or divorce.
Foreclosure can be painful for the homeowner, but good news for the deal-hunting buyer. The bright spot for sellers is that they can exclude canceled debt from their income tax returns, and they no longer have to make mortgage payments. The entire process can take several months, and the house is theirs until everything is finalized.
Observations About Short Sales and Foreclosures
Short sales in Boston 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 45 days 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 of time, and as a result are 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 effort, you can get a great deal on these properties and unlock some sweat equity!
Traditional sales vs. short sales and foreclosures in Boston – 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 the project of a distressed property. In such a situation, it’s best to lean on the expertise of a qualified real estate professional. And at NextHome Titletown Real Estate, we’re prepared to provide the guidance you may need. Call us today at (617) 657-9811!
Interested in Boston short sales or foreclosures? We can help! Contact us today for more information! (617) 657-9811
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The property listing data and information set forth herein were provided to MLS Property Information Network, Inc. from third party sources, including sellers, lessors and public records, and were compiled by MLS Property Information Network, Inc. The property listing data and information are for the personal, non commercial use of consumers having a good faith interest in purchasing or leasing listed properties of the type displayed to them and may not be used for any purpose other than to identify prospective properties which such consumers may have a good faith interest in purchasing or leasing. MLS Property Information Network, Inc. and its subscribers disclaim any and all representations and warranties as to the accuracy of the property listing data and information set forth herein.