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Bank Owned Vs. Short Sale

Choose Between Short Sale and Bank Owned Properties in Manatee County

Prospective buyers have different ways to purchase a home below market value. Some buyers choose to buy from homeowners, banks or mortgage lenders who own properties nearing or approaching foreclosure. Others opt for what is known as a short sale, a type of sales agreement lenders are willing to accept in order to reduce the loss of revenue that occurs as a result of a foreclosure. 

According to, a short sale is when a bank or lender agrees to accept a smaller payment than what was originally agreed upon by the homeowner. If accepted, the lender will come up “short” of the original amount owed. These sales on average take around 4 months to finalize. Despite the risk, this option may still be somewhat beneficial to the lender as they can avoid the expenses associated with foreclosures such as paperwork and attorney fees.

Homes for sale on the market during the short sale process may look appealing to potential buyers due to the low listing price; however, these prices may not reflect pending offers made during the negotiation process that has yet to receive confirmation from the lender. Only a relatively small number of offers made during the short sale process are accepted by the lender, sometimes as few as one in 10.  

In the event that a short sale offer is denied by the lender and the home does eventually become foreclosed, prospective buyers still have the option to purchase the property as a Bank-owned home or REO.

A bank-owned property is a residence that is acquired by the bank after it fails to sell in a foreclosure auction. These properties are then listed below the market price to avoid remaining uninhabited and to generate revenue for the lender. 

Bank owned properties also attract prospective buyers with their low prices. One concern in purchasing this type of home, however, is the delayed transaction period that occurs as a result of foreclosure. In this time, important documents such as titles and permits have to be obtained in order to place the home on the market, a process that can take between 8 months to a year.

Both bank owned properties and short sale homes provide options for prospective buyers wanting to purchase a home below market value. There is also less competition for these properties as many buyers do not want to wait through the extended transaction process to move into their homes. When thinking of purchasing a home listed as a short sale or a bank owned property, potential buyers should contact a real estate professional. 

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