Are short sales and foreclosures the way to go?

"From Short Sale offer to foreclosure to REO...and we still don't have an answer. We made an offer of the short sale asking price in July 09. I found that it went through a sheriff auction on Jan. 7th. Bank Bought it. But.... apparently there is a 12 month redemption on this house. I'm so confused. The Realtors involved seem to be clueless or are not telling us everything. It still has the realtor sign in front. The owners have left. What is really going on here?"

This is a question that was posted on Trulia.com yesterday. It's a terrific example of the pitfalls that can come along with foreclosed and short sale transactions. Many buyers ask us to set up a search for "foreclosed" properties because they think that's where they're going to get the best deal. While that may be the case sometimes, it's not always true and there often times those are the most damaged properties and the most frustrating to work through to a closing. Picture the home owner who is struggling or unable to make their mortgage payment. Do you think they are still doing all the necessary upkeep on the home and repairs that are often needed if they can't even afford the payment? If it's bank owned, many homes were damaged as the disgruntled owners left with no real concern for the "feelings" of the bank.

The other downside is having to work with lending institutions who are overrun with files to handle. There are often long delays and they'll routinely ask buyers to pay for costs that are customarily those that a seller would pay. Short sales are even worse from a time frame and frustration standpoint. Buyers and sellers can wait for months to hear from the bank on whether or not they're going to accept a short sale offer and often times there is no person to contact for an update. It's just wait and see and they'll get to it when they have time. More often than not, the buyer loses patience and walks away from the transaction.

I'm not saying that you shouldn't pursue a bank owned property or one that's being marketed as a short sale, I'm just saying don't count out the private homeowner who may be willing to be just as competitive on price! It will probably take a lot less time and aggravation to get into that home and you'll be helping an individual achieve their property goals at the same instant you'll achieve yours!