These words have been in the media, more than Britney Spears and her "big comeback".  These buzz words are getting a lot of attention due to the recent mortgage crisis.  When I sit down with buyers for the first time I go into both with great detail.  These lender mediated transactions were more that 53% of all pending sales in November.  Minneapolis Area Association of Realtors also reports that traditional sellers average sale price is $225,420 compared to the lender mediated sales price of $130,882.  Here is what to expect when you buy a short sale or a foreclosure. 

1.  Short Sale- This is when the bank/banks agree to take less than what is owed.  The short sale process usually begins once an offer is given to a seller.  It can take 30-90 days to hear back from the bank and 120-180 days to close.  This can be an extremely long process so if you have a dead line to be into a home this may not be the property for you. 

2.  Foreclosure- The bank is now the proud owner of the property.  They ask one or two Realtors to do a BPO (broker price opinion) on the property.  This is how the bank determines what a home could possibly get in today’s market.  They use this figure to set the list price and use it as a guide once an offer comes in.  These type of homes are buyer beware as they are sold as-is and I encourage every buyer to get a home inspection.  These homes can close in 30 days but delays are common and almost expected.

Both of these can reap huge monetary rewards for the buyer.  You can get many way below market rate and with a little TLC these houses can be a home.  You sometimes walk in with instant equity!  I will soon have 2008 statistics, so check back soon.