Which To Buy: Short Sale or Foreclosure

Nov 24, 2015

Short Sales Vs. ForeclosuresWhether a short sale or foreclosure is a better investment is a continuous hot topic among real estate experts. You can find those who swear by short sales, while others love to find foreclosures for their clients. Here are the pros and cons of both.
Short Sales
A short sale is a home which is still owned and lived-in by the homeowner, but the homeowner owes more than the house is worth.

Short Sale Pros

1. Condition

Short sales are often in better condition than foreclosures. This is because the homeowner is still living in the home and making payments.

2. Price

Short sales are generally in the same price-range as foreclosures.

Short Sale Cons

1. Closing Time

Ironically, short sales are typically the furthest thing from short. The process can drag on for months, which can cause a headache that negates the bargain price.

2. It limits your options

Since a short sale can take months to close, you can find yourself in an uncomfortable limbo. If the sale falls through at the last minute you would have to start from scratch and all the time you put in would be wasted.


A foreclosure is a home that the homeowner had to give back to the bank due to a failure to pay the mortgage.

Foreclosure Pros

1. Price

Foreclosed homes sell for a fraction of their value. According to Remax, the national average price for a foreclosed home is just above $107,000.

2. Profit potential

The low price of foreclosures make them an attractive buy for house-flippers. These people generally buy properties that require some work. They invest in remodeling the home and then sell it for a profit.

Foreclosure Cons

1. Condition

Foreclosures are often in worse condition than short sales. This is because some foreclosures haven’t had an occupant in months.

2. Potential Legal Issues

Potential legal issues can arise with foreclosures, especially ones bought at auctions. What seems like a great deal can turn into a major headache if you find out there’s a lien against the property.

Deciding Which to Buy

Can’t decide on your own? Give the experts at Beaches Title a call and make an appointment to discuss your options with an agent today.