Foreclosure and Short Sale Difference: Wilmington NC Real Estate
Almost every day, we get the question, "What is the difference in a foreclosure and a short sale?" Aside from the fact that they are both distressed sales and the banks are involved, that is about all as far as similarities.
A foreclosure is owned by the bank. They have completed all the legal requirements to regain legal ownership of the property as well as a clear and conveyable title. Since the bank owns the property outright, they are much easier to purchase and closings can occur relatively fast.
Short sales are not bank owned properties. The sellers still own the properties but due to a hardship, they must sell the property and it is no longer worth the amount owed. The seller typically does not have the ability to bring money to closing to cover the difference. In this case, the property is advertised for sale at a price that induces an offer. The offer must be contingent on bank approval. Once the contract is signed, it is sent to the bank for their approval. The process of waiting for bank approval is what frustrates most buyers (and sellers). There is no guarantee that the bank will accept the short sale offer or any offer that is less than what is owed. Months can pass before the bank responds so if the buyer needs to close on a home within 2-3 months, a short sale may be an exercise in frustration and futility.
In either case, buyers need to understand that the property is typically being sold "as is." It can be wise to have licensed contractors or inspectors survey the property prior to getting involved.

