types of home purchases


My post last week debunking the myth of short sales led to several questions about the different types of purchases. That is a great question, so I thought it would be ideal to follow up the “myth” post with more details on the different types of home purchases.

The first category would be the retail sale. A retail sale is a more traditional view of the home buying process. It involves a buyer looking to purchase a home from its current owner. The current owner may have a mortgage on the house, but they are looking to sell the home for more than what is owed on the house (distinguishing this from a short sale). A retail sale would include homes for sale by owner, negotiated with a real estate agent, and owner financing transactions. This is the quickest purchase transaction.

The next category would be a foreclosure sale. With a foreclosure sale, the bank that held the mortgage (also known as a NOTE in Georgia) took the home back into its possession because the home owner failed to make their mortgage payments.  Theoretically, the bank owns the foreclosure and there are no title issues (though there has been some debate lately. See this recent post for more info).  In most cases, buyers must work with a real estate agent to purchase a foreclosure. These transactions take a little longer than a retail sale for two reasons.

  • As we’ve read/heard lately in the news, there could be title issues or delays in getting clear title back from the attorney on the bank that owns the property.
  • The bank that owns the property typically wants the closing package 3-5 business days in advance of the closing date. In retail purchase cases, the closing package can arrive the day before closing (day of in some cases), but the 3-5 day requirement simply adds 3-5 days onto the total time needed to close.

The final category is the short sale. If you read my previous post, you already know about short sales. In this transaction, the current home owner sells the home for less than what is owed on the mortgage. In order to do this, the bank that holds the mortgage (NOTE) must also agree to this. It is the agreement process that delays short sales from being completed in a timely fashion. The average time is about six months to complete a short sale start to finish (I worked with a couple buying a short sale and it took 10 months).

Which is the right path for you? That is a much better question to ask a real estate agent, but my quick thought is that it all comes down to two factors – time & money.

  • if the goal is to get the best deal possible, that is more likely to happen looking for a foreclosure/short sale property.
  • if the goal is to be in the home as quickly as possible, then one should definitely look to go the retail sale route

I am not in a position to help anyone look for homes. BUT before looking at homes, getting prequalified to buy a home is essential. If your future home is in Georgia, that is something I can do for you. To get started, call or email me!

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