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Do you want to buy a home and are deciding between a short sale vs. foreclosure? Read here to learn the difference between the two and which is right for you.

Short Sale or Foreclosure?

Did you even know there was a difference?

When looking to buy a house, it can be tempting to look at short sale homes and homes in foreclosure because of the price tag. Especially if you are looking for an investment property.

What is the difference between the two?

If you want to buy a home and are deciding between a short sale vs. foreclosure, keep reading here to learn the difference between the two and which is right for you.

Short Sale vs. Foreclosure

There really is no wrong or right answer.

It depends on what the buyer is looking for and how much work you are willing to put in. Here are the basic differences between the two.

Short Sale

In a short sale, the home is still owned and occupied by the homeowner. The homeowner owes more on the mortgage than the home is worth.

The homeowner will work with their lender to see if they qualify for a short sale.

A homeowner will list the home with a realtor. When a potential buyer makes an offer, both the homeowner and the lending bank must accept an offer from the buyer.

The bank will have to agree on the price and the homeowner will be responsible to make up the difference.

Because the homeowner and bank are both involved, this process could take quite a bit longer than conventional real estate deals. It can take up to 6 months.

The benefit to a short sale home is they are typically in better condition because the homeowner still lives there, the house has been taken care of.


2.2 million homes have gone into foreclosure since 2009. Many homeowners find it hard to keep up with their mortgage payments, especially after the 2008 financial crisis.

When a home goes into foreclosure, it means the bank has completely taken over the property and the homeowner has been evicted.

Often these homes are run down and have not been taken care of. The utilities have been turned off and the yard is overgrown.

If you aren’t afraid of putting in some elbow grease, a foreclosed home could be for you.

Typically you can get these properties for bottom dollar. The bank will often hold an auction and the home will go to the highest bidder.

Just make sure you research the property to make sure you know exactly what you are buying. You may want to check out the structure, plumbing, and electrical system. Also, check if there are any liens on the property.


When trying to decide short sale vs. foreclosure, here are the two basic rules to remember:

Short sale: The process will take longer, but the home will be in better condition. Expect this process to take about six months.

Foreclosure: The banks are anxious to get rid of these properties so you can get the home for cheap and it’s a quicker process, but the home may be in bad condition.

Whatever you decide, it’s always best to have help and advice from a professional. Give us a call, we can help you make the most out of your investment.