In recent years the terms “short sale” and “foreclosure” have become buzz words amongst realtors, investors, and the public. It is very important to know the difference between the two when searching and considering putting an offer on these types of properties. Just simply knowing the difference can assist you in many ways of the process further helping you become successful in purchasing the property.

A short sale is when a lender agrees to take less than what is owed on a property. This can be a longer than expected process in most cases. It is important that you understand the short sale process before placing an offer so you do not waste your own time. First thing to remember is that the bank does not own a short sale. The bank is only a lien holder of the property and the seller is still the seller in the transaction. This is the most common mistake when making an offer to a seller on a short sale.

The seller remains the seller of the property until the title of the property is transferred via foreclosure. Many people tend to think that all offers must be presented to the bank when they must be presented to seller only. If the property does get taken back through means of foreclosure then it will become bank owned.

A seller has the ultimate decision on what offers the bank sees since they still remain the seller of the property. Believe it or not, but if you find yourself in negotiations with a seller in this situation and the bank counters your offer they technically do not have the power to do so since they are not the seller. The bank is countering the payoff or net amount they will be receiving once they the short sale is closed. While this happens all the time just keep in mind that the bank is only approving a payoff to the property. If conducted correctly this process should take between 60-110 days depending on what banks are involved and who is conducting the process.

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If you’re struggling with your finances and don’t know what your options are, you’re going to feel helpless in your situation. Here are some tips and tricks to avoid bankruptcy, and options that are available to help you resolve your outstanding mortgage.

The best advice you can ever get regarding your mortgage is that your highest priority in paying bills is to pay your mortgage first. That’s hard advice to follow, though, because you can’t live without utilities or food. It becomes even more complicated when you need to buy gas to look for a job or get to work to make money to pay for your bills. A mortgage often takes a backseat to these kinds of expenses.

You do need to scrutinize your spending while working on your mortgage payments. Have a family meeting to gain a consensus that everyone will pitch in and help save money. Identify areas of spending in which you can save. Oftentimes, there are areas you can cut back that you just never thought of.

For instance, rent movies from a local Redbox that only cost $1 per night, or rent from online sources like Nexflix or Blockbuster for a nominal monthly fee. They all can be found online. Instead of dinner and movie night outs for your family, have a dinner theme night at home, along with watching a rented movie. These are just a few strategies that can help you save lots of money.

At the onset of struggles to pay your mortgage, contact your lender. Talk to your lender about your situation. Maybe you’ve experienced a job loss or medical emergency – two of the most predominant reasons people end up in foreclosure. Discuss your situation with your lender, find out what they are willing to do. Most often, lenders don’t tell you what your options are. Instead, they require you to submit for consideration and then wait.

If you are waiting on a response from your lender, don’t let your mortgage fall into default. Understand the laws of your state in regards to foreclosure. Find out the timeframes of when certain notices need to be filed, and take action if your lender is taking its time in responding to you.

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