Why Foreclosures and Short Sales Shouldn't Scare You


If you are trying to buy a home in the Colorado Springs market you will find many homes are selling within hours of being listed and for more than the asking price. Bidding wars and emotional buyer incentive letters are not uncommon in the Pikes Peak region; buying a home here can require patience and tough skin these days.

A less common purchase option many buyers don’t consider but should is purchasing a foreclosure or short sale. Not only are these non-traditional sales sometimes easier to obtain, but they can be the perfect option for anyone willing to get their hands a little dirty with renovations.

But what exactly is a foreclosure? And how does that differ from a short sale?

A foreclosure is a bank owned property that has usually been repossessed after the owner has stopped paying the mortgage, where as a short sale is a home sold for less than the outstanding mortgage on it. For example, Mr. Smith owes $250,000 on his home but because Mr. Smith lost his job and cannot pay the mortgage, the bank allows the house is now worth less than what he owes, the bank allows him to sell it for the current market price of $210,000.

The major benefit to buying either a foreclosure or short sale home is the cost. The bank wants to get the home off their books so, while closing usually takes longerand is unpredictable in its outcome, you are looking at a really great deal. In a market as hot as Colorado Springs, this is a huge bonus. Additionally, these homes have the potential for major equity because you are buying below market rate.

Some people are scared of buying a foreclosure or short sale because they’ve heard horror stories of previous owners trashing the house upon eviction. While this has happened, it is not always the case and should not steer you away. Other possible disadvantages include financing (extra paperwork may be required by your lender), overdue home repairs, and steep competition—especially with investors on auction homes if the home is priced attractive enough.

Still, foreclosures and short sales can be great options for those looking for a hot deal in a hot market. At Woodleaf Realty, our agents are experienced with helping buyers find and secure their dream home via foreclosure or short sale. Don’t let all the stories scare you; call us today and we are happy to speak with you about the unconventional options for buying a home!