Short Sales and Foreclosures: Which One Should Real Estate Investors Buy?

Short Sales and Foreclosures: How Are They Different?

Real Estate Investing: Short Sales and Foreclosures
Short Sales and Foreclosures

As unfortunate as it can be when homeowners fall behind on mortgage payments and must face the possibility of losing their homes, short sales and foreclosures provide them options for moving on financially. The terms are often used interchangeably, but they’re actually quite different, with varying timelines and financial impact on the homeowner. Here’s a brief overview*.

A short sale comes into play when a homeowner needs to sell their home but the home is worth less than the remaining balance that they owe. The lender can allow the homeowner to sell the home for less than the amount owed, freeing the homeowner from the financial predicament.

On the buyer side, short sales typically take three to four months to complete and many of the closing and repair costs are shifted from the seller to the lender.

On the other hand, a foreclosure occurs when a homeowner can no longer make payments on their home so the bank begins the process of repossessing it. A foreclosure usually moves much faster than a short sale and is more financially damaging to the homeowner.

After foreclosure, the bank can sell the home in a foreclosure auction. For buyers, foreclosures are riskier than short sales, because homes are often bought sight unseen, with no inspection or warranty.

Short Sales and Foreclosures: Which One Should Real Estate Investors Buy?

In general, the short sale is a far better deal than a foreclosure since the home condition is more likely better as it’s been occupied by the homeowner. However, buying a short sale often takes a longer time as compared to buying a foreclosed home. Also, when buying a short sale, investors should question whether there are two mortgages on the house. Overall, depending on their needs, the investors might prefer buying one over the other. Again, there’s no guarantee in any real estate deals. The best strategy is to manage the risks, know what you want and just go for it.  

BONUS: Start Investing in Short Sales and Foreclosures by watching this video “The Secret to Short Sales and Foreclosures” by Phil Pustejovsky


Here are five of my most favorite quotes:

1. “The major fortunes in America have been made in land.” – John D. Rockefeller

2. “Ninety percent of all millionaires become so through owning real estate.” – Andrew Carnegie

3. “Price is what you pay. Value is what you get.” – Warren Buffett

4. “He is not a full man who does not own a piece of land.” – Hebrew Proverb
5. “Whatever you want go all in and dominate (real estate), learn it, eat it, sleep it, breath it and believe it.” – Grant Cardone

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As a happy student of life, Huy has discovered that life is a series of very interesting courses where he can’t just simply learn from books or schools. Fortunately, every person that he meets and every incident that he faces truly give him tremendous valuable lessons. The most important aspect of being a student of life is that he learns things with a great intention: to improve himself every day.

With a strong background in finance and business, Huy will share with you great lessons that he has learned over the years. Let’s share our knowledge so we will learn from each other!

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Also, I want to share with you on my real estate website: My website will help you figure out the estimated valued of your home as of today by simply typing your home address along with your name and email. And the best part is that you can always let me know if you have any real estate needs.

Particularly, Huy provides three main services to his clients:

1. Free estimates of your homes without any payment obligations
2. Free consultation on how to list your homes for sale.
3. Free consultation on how to buy your first homes and obtain a pre-approval letter.
Let’s get connected to help me help you determine the right solution for your real estate needs.