Buying a Short Sale Vs. Bank Owned

Buyers are usually unsure on which is the best property to go after, a short sale or a bank owned property and my question would be…are you needing to get into a home quickly or do you have time and a little bit of patient?

To go into this deeper,  it may be best to explain the difference between the two, along with the circumstance that will come with the properties.

Short Sale

A short sale is where the property is being sold for less than what is owed to the lender or lenders. In most cases the homeowner has stopped making payments to the lender and are behind on their mortgage. However, in some occasion, the homeowner may just need to sell but owes more than what the home is worth.  The difference between these two scenarios is…one homeowner is in duress and no longer can afford the home while the other one is current on their mortgage and they are able to make their payments. 

For the sake of this Blog we will talk about the most common and that is the duress homeowner who is being force to sell their home or loose it to a foreclosure.

Your typical short sale can take months to close, In my city of West Jordan, the average time to close a short sale is six and half months. Has of writing this post there are currently 500 homes on the market in West Jordan, which half are short sales. Year to date only 41 short sales made it to the closing table, which indicates some may have went to auction or others are still sitting on the market waiting for the banks to approve the short sale or the buyers have just moved on and now a new offer will have to be resubmitted to the lender.  

What I have experienced are three distinguishing factors that causes the delay in a short sale and they are.


The homeowner/seller may not be cooperating with the listing agent. They are delaying in getting the required documents to the listing agent so then the agent can submit those documents to the lender.


 The listing agent may not have done a short sale before or they may not of asked for the proper information from the seller in advance before listing the homes, that the banks need. They may wait until the banks tell them what to do instead of being proactive and giving the lenders a complete short sale packet in advance. Agents need to stay in constant contact with the lender so the communication line stays open. If is left up to the bank to keep the communication line open, the short sale will more likely fail.


Lender may be the one’s who are not cooperating. The banks are over whelmed right now with short sales and most of the time they are under staffed. The agent and seller are doing their part by getting everything into the lender only to have the paper work get lost, stalled or become out dated.

So a short sale has a lot of factors going against it and they have many hands in the pot, sort of speak.

Short Sale prices are attractive and you can pick up a great deal on a home, you just have to be willing to wait it out and possible do this on more than one property.

Bank Owned

Bank owned properties you have one owner to deal with and that is the bank, not banks because if there was a second mortgage or other liens on the property prior to the foreclosure, they were wiped out at the auction. Banks are your true motivated sellers. They need to sell the properties, usually at a reasonable price, to get them off their books.

Most bank owned properties are below market value in the area. Most, but not all, needs work.  I have seen some bank owned properties that are in move in condition. Foreclosed properties in my area, that are price right, are going under contract with in weeks after being on the market.

After submitting an offer,  it is just a matter of days before you hear back from the bank on if your offer was accepted or not. No waiting for months at a time like you would with a short sale. You are buying a bank owned property in the as-is condition, the short sale property you are as well. Also the chances are better to have the bank pay for the buyer’s closing cost when the bank owns the property.

With this being said, I hope you can make a educated decision on which property may be right for you to pursue, Bank Owned or Short Sale. Both will have there rewards and down faults but you usually can come away with a great deals.

Todd  Rodocker  specializes with first time home buyers, seasoned buyers and investors.  He can be contacted at, cell 801-694-0903  or by visiting his web sites,


About toddrodocker

Todd Rodocker Realty Group is Premier Real Estate Agent and Loan Originator in Utah and promotes Home Ownership to everyone. Todd Rodocker Realty Group is partner with Aubrey & Associates Realty and Altius Mortgage. NMLS 317650
This entry was posted in Buyers, For Sellers, Investing In Real Estate, Short Sales. Bookmark the permalink.

1 Response to Buying a Short Sale Vs. Bank Owned

  1. Pingback: Five Things You Should Know About Buying a Short Sale | My Blog

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