Fortunately, we are starting to see less distressed properties for sale in most markets, but they do pop up. Often buyers are confused about the common terms used; short sale, foreclosure, distressed are all terms found in listings and can be confusing.
First of all, the term “distressed” is a catchall term for any property that is not being sold more traditionally. It certainly includes both short sales and foreclosures. It can also be used to describe a severely damaged property that might not be able to obtain conventional financing due to lack of livability.
Short Sale
A short sale is a home where the seller owes more than the home is worth and is asking their mortgage holder to accept less than they owe in the sale. The purchase price must have their lender approval.
Foreclosure
A foreclosure is a home which was lost by the previous owner and is now being offered for sale by the bank that held the old mortgage note.