What is a Foreclosure? What is a Short Sale?

Like every other major metropolitan city, Denver has a higher than average foreclosure inventory and short sales, also known as a pre-foreclosure, are on the rise too. Foreclosed properties are also known as bank owned properties, and includes real estate owned by individual banks, HUD, VA, Fannie Mae, and Freddie Mac. You'll also hear this as being referred to aas REO Properties.

What's the Difference between a Foreclosure and a Short Sale?

A Foreclosed Property is:

a.) One that the bank or lender has acquired through a legal process that often takes 6-12 months

b.) The process of negotiation for a foreclosed property can take up to a week to get an answer from the bank, and

c.) The Bank usually accumulates several offers prior to accepting a single offer.

A Short Sale, or Pre-Foreclosure, is:

a) A property whereby the owner’s are behind in payments and are effectively “upside down” in their valuation position,

b) Negotiating for a short sale is a very time consuming process since the bank does not yet own the property,

c) The owner may have more than one mortgage on the property which will require even more patience to negotiate a transaction, and

d) Negotiations can range typically anywhere from 1 month to 6 months . . . so be patient.

e) These short sales can often be your “best buy” because the bank really doesn’t want to go through a lengthy and costly foreclosure process.

f) Be sure to work with a realtor who is a “Short Sale Specialist”, otherwise a Buyer and Seller can be unintentionally misled resulting in added liabilities and money.