Home sales usually fall into one of three main categories: traditional sales, short sales, and foreclosures. For buyers, each has pros and cons, though 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 cheaper for a good reason. The best route for you depends on your financial situation and your goals, especially whether you’re buying the property live in or as an investment. Let’s take a look, then, at traditional sales vs. short sales and foreclosures in Ohio.
Traditional Sales
This is what most people think of when they consider selling a home—traditional sales involve a seller and a buyer who come to an agreement on a set price for the property. In this scenario, the seller has the freedom to sell their home on their terms, without external pressures. The seller may be motivated by various personal reasons—perhaps upgrading to a larger home, relocating for a job, or simply downsizing—but they are not being forced into the sale by a lending institution or a financial crisis.
In contrast, situations like short sales and foreclosures in Ohio involve external pressures that make the selling process more complicated. In a short sale, the homeowner is attempting to sell their property for less than what is owed on the mortgage, and the lender must approve the sale. This type of sale is often initiated due to financial hardship, such as job loss, illness, or an overwhelming amount of debt, making it a more difficult and stressful situation for the homeowner.
Foreclosures, on the other hand, are typically initiated by the lender when the homeowner has defaulted on their mortgage payments for an extended period. In a foreclosure, the homeowner may not have the option to choose when and how to sell the property, as the lender takes control of the process. Foreclosures can severely impact the homeowner’s credit and future financial opportunities, often leaving them with little to no equity from the sale of their home.
With traditional sales, however, the seller retains more control over the process and is usually not under the pressure of a looming deadline set by a lender. This allows them to plan, prepare, and negotiate the sale with more flexibility, potentially leading to a smoother and less stressful transaction. However, even in traditional sales, it’s essential for the seller to be aware of market conditions, pricing, and potential repair or staging costs that may affect the overall outcome.
In summary, while traditional sales provide more control and flexibility for the seller, short sales and foreclosures in Ohio can be more complex, involving lenders and deadlines. Understanding the differences between these types of sales is crucial for homeowners looking to make the best decision for their situation.
Short Sales
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, there is nothing short about the amount of time a short sale takes. 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 good deals.
Foreclosures
If a homeowner fails to make mortgage payments, the lender has the legal right to issue a foreclosure notice, which informs the homeowner that the property will go into foreclosure after a 90-day period. During this time, the homeowner is given the opportunity to catch up on past due payments or come to a payment arrangement with the lender to avoid the foreclosure process. However, if no agreement is made or the payments aren’t brought current, the property will move to auction, where individuals and companies can place bids on it. Typically, there is a minimum bid set by the lender, and in some cases, if the property doesn’t sell at auction, the lender will take the property back with the intention of reselling it to recoup the outstanding loan balance.
While foreclosures can be an attractive option for buyers looking to snag a good deal, the process can be quite complex and overwhelming for both parties involved. The emotions and circumstances surrounding a foreclosure can make the experience particularly difficult. For homeowners, being forced into foreclosure is never an easy decision and can result from a variety of factors completely out of their control, such as an extended illness, sudden job loss, or a divorce. These personal hardships make the foreclosure process not just a financial strain but an emotional one as well.
On the other hand, for potential buyers, foreclosures can present an opportunity to purchase property below market value. But the process often involves navigating legalities, dealing with property “as-is” conditions, and sometimes facing uncertainty with the title. These hurdles can make foreclosure purchases tricky, requiring the buyer to do extensive due diligence.
For sellers, while foreclosure can be painful, there are some silver linings. One of the benefits is that they may be able to exclude any canceled debt from their income tax returns, which could reduce their overall tax burden. Additionally, homeowners no longer have to worry about making mortgage payments once the property has been taken by the lender, which can provide some financial relief. The foreclosure process may take several months to complete, and during this time, the homeowner still retains possession of the property until everything is finalized, offering some breathing room during what can be a stressful time.
Ultimately, while foreclosure is a challenging and emotionally taxing situation for homeowners, it can offer relief from ongoing financial obligations. For buyers, it presents an opportunity to secure property at a lower price, but it comes with its own set of challenges. Whether you’re a homeowner facing foreclosure or a buyer considering this route, understanding the full process is key to navigating this complex situation effectively.
Observations About Short Sales and Foreclosures
Short sales in Ohio 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 45days 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 and 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 put in a little elbow grease, you can get a great deal on these properties.
Traditional sales vs. short sales and foreclosures in Ohio – 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 a distressed property. In such a situation, it’s best to lean on the expertise of a qualified real estate professional. And we’re prepared to provide the guidance you may need. Call us today at 937-998-4239!
Interested in Ohio short sales or foreclosures? We can help! Contact us today for more information! 937-998-4239