Should I buy a Fresno Short Sale or the Fresno Foreclosure?

I’m frequently asked to explain the difference between a Fresno short sale and a Fresno foreclosure property. Fresno buyers in today’s market who are cash heavy and have a flexible time frame may be in the best position to purchase one of these Fresno short sale properties.

Short Sales:
A short sale is when a home owner wishes to sell, but owes more money on their mortgage than the home is actually worth in today’s market. Some characterize this seller as “distressed” but the bank has not started the foreclosure process or taken title from the owner. Therefore, in a short sale situation:

· The homeowner still owns the property (And is maintaining it as well)

· The owner usually occupies the home (or has tenants)

· The property will be sold “as is,” meaning the owner/lender will not pay for any surveys, repairs or credits for any inspection items.

· The buyer enters into a contract to purchase with the homeowner, but needs lender approval to forgive the difference between the sale price and the balance on the mortgage.

· The time frame from contract to close is generally between 3 -5 months.

Foreclosed Properties:
A property is owned by the lender, usually a bank. The lender usually hires a company to oversee the management and sale of the property.

· The bank owns the property.

· The home is usually vacant, and unfortunately, may be missing appliances, is damaged, or in need of repair.

· Utilities are generally disconnected which can make previewing the home in the evening or in cold weather difficult.

· Property usually sold “as is.” The bank does not provide any property disclosures or guarantees any information.

· Buyer enters into a contract with the bank/lender.

· Cash offers generally win out, even when other offers are more. The banks generally don’t want to risk selling to a buyer who may be unable to secure financing.

· Response time from a bank can be as quick as 3 days or as long as a month. It can vary drastically depending on which bank it is.

Short sales are a great opportunity for today’s buyer… as long as the expectations concerning the time frames associated with short sales are set correctly from the beginning. All the heart aches and horror stories you hear are most likely due to the buyer not being completely informed about the short sale process and time frames.