What is the difference between a “short sale” & a “foreclosure?”

In the case of a short sale, the lienholder (bank) agrees to accept a payoff less than the full amount owed, writing off the difference. How it works: A contract is negotiated between a buyer and seller, then submitted to the bank for approval. What the bank is actually "approving" is the final payoff they will receive as a result of the terms of the contract, not the contract itself. The bank will order a broker price opinion (known as a BPO). After a thorough (and often time consuming) evaluation of the seller’s financial situation, the terms of the contract and the outcome of the BPO, the bank will either approve the payoff, thereby allowing the sale to continue, or instruct the parties to make changes in order to get approval. If changes are requested, the buyer and seller must renegotiate the contract, or agree to cancel it.

In the case of a “foreclosure,” the bank has already taken the property back from the original owner via court-ordered auction, and now owns it. A bank-owned property is also known as an “REO” (stands for “real estate owned”). Bank owned property is sold in the same manner as traditional property, and doesn’t typically include the long waiting periods experienced in a short sale.

In a short sale, how are multiple offers handled?

It is important to remember that in a short sale situation, the bank is not a party to the sales contract. The contract is still between one buyer and one seller. The bank's approval of a short payoff is only a "contingency" of the contract, just like buyer financing or inspection might be. So, the bank does not consider "offers." In order for a bank to consider approving a short sale, they need to be presented with a fully executed contract, representing a meeting of the minds between the buyer and seller. It is a common (mis)understanding that banks will consider "multiple offers" for a short sale and pick the highest one - that's not technically accurate. If a seller is presented with multiple offers from separate buyers, he/she may only sign ONE of them. That one becomes the primary contract. Any other offers can be signed, but only as "backup contracts." The seller cannot agree to sell the same property to two different parties. All of these contracts can be put in front of the bank for consideration. With multiple contracts to consider, the bank becomes aware that the property is desirable (because multiple parties are vying for it). They may also become aware that one of the "backup buyers" is willing to pay more than the "primary buyer" which would net them more money as a payoff. If this is the case, the bank will not approve the sale for the primary contract. They will give the seller a "net number" which they require as a payoff, and then wait for the seller to bring them a contract that gets them that number. They don't care from which buyer it is!

How are multiple offers handled in a bank owned foreclosure?

Multiple offers are very common with bank owned foreclosures, so much so that the buyer is typically required to sign a disclosure acknowledging the fact that there may be multiple offers whether there currently are or not. In the face of multiple offers, most banks will go back to all the buyers and ask them to resubmit their offers containing their "highest and best" price and terms. The bank gives everyone a deadline (usually 24-48 hours), and then "decides who gets it" once they've got all the new offers in front of them.

Why work with a foreclosure and short sale expert?

In today’s market, there are thousands of properties being marketed as “foreclosures” and “short sales.” Unfortunately, not every agent is properly trained or experienced enough to navigate the complicated process of these special transactions. Often times, properties marketed as “short sales” are never approved by the bank for reasons that could have been uncovered in the very beginning given a little research.

We have the knowledge and experience necessary to represent you in a foreclosure or short sale purchase, protecting your investment and getting you the very best deal possible.

What’s a better deal? Bank-owned foreclosures (REO’s) or short sales?

Banks do not want to be homeowners, so they are very anxious to unload their REO’s, often at bargain prices. This desire to not own property extends to short sales too. They have enough trouble dealing with the number of foreclosure properties they already own, they don’t want to take on any more! For these reasons, great deals can be made on both bank-owned foreclosures AND short sales.

That said, with a short sale situation the bank doesn’t own the property YET. So, chances are, given the same exact property - one already an REO and the other an “REO-in-waiting” short sale - the bank is more likely to make a deal on the REO.

Are these the BEST deals out there?

Bank owned foreclosures and short sales are certainly bargains when negotiated properly, but they aren’t the only game in town. Private sellers are having to compete with these listings along with the countless other properties for sale in their own communities. We can find you deals beyond just bank owned and short sales, negotiating to get you the best price possible.

We are a full service company. We can represent you in any transaction from bank owned and short sale to traditional, estate and even “for sale by owner” properties. If it’s for sale, we do it.

I’ve tried calling banks directly, why won’t they give me a list of their properties?

Banks do not want to deal directly with the public. When they take a property back in foreclosure, they do one of three things with it: 1) Hold onto it until it’s saleable (i.e. liens cleared, repairs made, etc), upon which time they will proceed with selling it, 2) Hire an auction company to auction it (usually combined with many other properties at the same time) or 3) List it for sale with a real estate agent who then markets it to the public,

We know how to identify foreclosure and short sale properties, and to negotiate with the bank to get you the lowest price possible. It is very important to make sure you are represented exclusively, and not by a listing agent who’s got a responsibility to get the highest price possible for the seller. We work for you alone.