Understanding Short Sales & Foreclosures In Santa Cruz County

In today’s competitive market a buyer typically has a choice of 3 types of properties available to purchase. The 1st is a conventional sale between a buyer and seller. The 2nd is short sale, which a seller owes more against the property then current market value. The 3rd is when a property was previously foreclosed (R.E.O.) and the bank is the seller. All three have advantages and disadvantages. Understanding the differences will help you set realistic expectations during the transaction. You can have confidence that our Realtors are professional, knowledgeable and highly experienced with short sales & foreclosures. American Dream Realty has been serving the Santa Cruz community since 1987 and looks forward to helping you with all of you real estate needs.

Conventional Sales

Advantages

  1. Offer is presented directly to seller & seller has authority to accept. (Typically a fast response)
  2. Seller has knowledge of property for disclosures, which assist buyers with additional information about the property

Disadvantages

  1. Typically not as competitively priced as well as short sales or foreclosures (R.E.O.’s)
  2. Often difficult to find because there are not abundance on the market

Short Sales

Advantages

  1. Seller has knowledge of property for disclosures, which assist buyers with additional information about the property
  2. Often very aggressively priced
  3. Large inventory of short sales (depending on area)

Disadvantages

  1. Long escrow periods. Short sales typically take between 60-180 days to close escrow
  2. Bank has to accept and can reject buyers offer even after seller initially agrees to price & terms
  3. Sometimes there is deferred property maintenance due to the fact seller has little or no money to fix property before close of escrow

Foreclosure (R.E.O.)

Advantages

  1. Often very aggressively priced
  2. Typically large inventory of R.E.O.’s (depending on area)
  3. Seller (bank) is very motivated so buyers can often negotiate cash credits for property conditions and problems that arise during escrow
  4. If buyer elects, seller (bank) can typically close quickly

Disadvantages

  1. Property is being purchased “as is” and seller has no knowledge about property for disclosures and is “exempt” by law from providing a property disclosure to help buyer with purchase decision
  2. The bank often has their own contracts that “favor” the banks interest. Please review ALL bank contracts and discuss with an attorney any legal questions or concerns you may have.
This document is provided for educational purposes. This is a list of a few but not all of the advantages and disadvantages. It is NOT intended to provide legal advice. American Dream Realty is NOT an attorney at law. American Dream Realty always recommends consulting with an attorney for specific individual advice.
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