Foreclosures and Short Sales
There is one important difference between a foreclosure and a short sale. Because the original owner of a foreclosure has walked away from the property it is quite likely that he has taken everything moveable with him. Although there are occasional exceptions, you should expect that the home will be unfurnished. It is probably going to be missing some appliances, too, and there have been plenty of examples when air conditioners, thermostats and even the kitchen sink have disappeared!
Another common problem with foreclosed properties is that they may need some renovation. Prior to the foreclosure process many vacation home owners put long term renters into their homes, leading to dirty or damaged carpets, scuffed paintwork and other types of damage. Make sure you know exactly what you are buying, and what it will cost you on top of the purchase price.
If you buy a foreclosure you may well need to spend some money to bring the property back into good condition, sometimes a few hundred dollars, but often many thousands of dollars. So when you are comparing the prices of homes for sale, make sure you are comparing like with like.
Be sure that you have the ability to deal with the mechanics of upgrading a distressed property before you commit to buying it. If you live several thousand miles away it may not be so easy to coordinate and monitor the work that is needed. You may take some time before you can start to get any rental income from the property. We can provide you with a ballpark estimate of the renovation costs of any particular home on request.
In the case of a short sale, since it is still in its original ownership, it is more likely that the home will be sold as a going concern, although the seller may want to negotiate a separate price for the furniture and contents. While there are plenty of exceptions, you can usually find a short sale property that is still in an active rental program and which needs little or no work before it can generate rental income for the buyer.
More about foreclosures
More about short sales