Purchasing distressed houses for sale can bring in a lot of savings, particularly for buyers who have planned well and have studied the market of distressed dwellings carefully. There are several ways by which such properties are sold and it is up to the buyer to decide which one suits him best.
The Process of Short Sale
One option available to home buyers is a short sale. Distressed dwellings can be purchased using this procedure if a home owner is facing the possibility of getting foreclosed but has yet to have his property sold at an auction. Under this process, the lender should agree to sell the residence for a price that is less than the amount owed by the homeowner to them.
The advantage of a short sale to a home buyer is that he can acquire the property at an even lower price since it will not cover any existing loan or late fees and other monetary obligations. It also offers an advantage to the homeowner since he can stop paying for a mortgage that he can no longer afford without doing damage to his credit rating.
Real Estate Owned or REO
Distressed houses for sale that have become REOs only mean that the ownership has already reverted to the lender or the bank that holds the mortgage. The basic process is similar to a short sale, with the difference that a buyer would have to negotiate directly with the lender or the lender's real estate agent and not the homeowner.
REOs are considered safe transactions since these properties traditionally do not carry liens or unfulfilled obligations. However, the process can take months to complete and competition among interested buyers is always tight. In addition, some REOs have been left vacant for some time and might have incurred damages that might cost a buyer significant amounts to repair.
When buying distressed houses for sale, a home buyer should always consider which process would benefit him most. He can go for a short sale if the deal is reasonable and the transaction can be closed at the fastest possible time, or he can opt for an REO to eliminate the problem of dealing with the actual seller.