Glossary Terms
Private Sales
Also known as "traditional" or "regular" sales. This transactions allows the home seller to sell his house to any buyer. The seller does not need an approval or authorization from the bank that holds the mortgage.
As a general rule, homes sold through these "traditional" sales are usually in better condition than bank owned homes.
Two benefits of buying through a "regular" transaction is that the buyer can negotiate repairs and response times are usually very fast.
Bank Owned Homes
Also known as foreclosed homes. These are the homes banks obtain through a foreclosure process. Bank owned homes usually take longer to close than a "regular" transaction but not by much. Banks want to close as fast as possible. However they have lots of internal steps, and approval levels to go through before the transfer of a home. Each step adds to the overall timeframe of the transaction.
Banks usually do not repair homes received through foreclosure. As a result, bank owned homes will typically require some repairs.
HUD Homes
These are homes owned by the U.S. Department of Housing and Urban Development. They are sold through an electronic auction to the highest bidder. Buyers should expect to find properties in similar condition as bank owned homes.
A benefit of buying a HUD home is that the home buying process is very well defined and follow a very strict timeline. Home buyers usually receive an answer within 24 hours of bid submission and a typical transaction closes between 45 and 55 days from the date when the bid was submitted.
Short Sales
Short sales are sales where the owner owes more on the mortgage than the house is worth. Short sales need to be approved and authorized by the bank(s) holding the mortgage(s).
Houses in short sales are typically in better condition than bank owned homes. Most owners that are trying to complete a short sale will maintain the property throughout the process. In many cases the owner is still living in the house during the short sale process and will move out orderly once the house sells.
One of the challenges in buying a short sale home is that there is no guarantee that the bank(s) will approve it. Home buyers wanting to pursue short sales need to be patient, which can take anywhere from a couple of months to 4 or 5 months.
