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TIPS for BUYING A SHORT SALE OR FORECLOSURE in MN, WI, or SDShort Sale and Foreclosure Mortgage Application

Our market is flooded with properties that are in some stage of the foreclosure process. While these properties can be a fantastic deal, there are many special details that must be considered. Here is a short over view. Call me anytime, and I'll go over your personal situation with you. No Obligations.


A short sale is a property that the owner is trying to sell, but they owe more on their mortgage loan than the current market value of the home. It may even be in the beginning stages of foreclosure. The home is usually still occupied by the owner, but contrary to popular belief, these homes are generally not some sort of great bargain. Rather they are generally priced right for the current market.

The process begins when the owner puts the house for sale, and someone makes an offer to buy it. The owner will usually accept the offer right away, but that is only half the process. The owner must now present the offer to their bank, and basically beg their mortgage company to let them off the hook by accepting less on the home as full payment than they actually still owe.


The bank short sale approval process can take weeks, or even months to give an answer.Search the MLS for short sale and foreclosure homes for sale in MN Of course the bank can approve or reject the offer. The bulk of the time it takes is because the bank isn't going to just automatically take a big loss. They do many things before deciding, including checking out the seller, and the sellers current financial situation. Are they really in financial trouble, and can no longer afford the home?  Are the just trying to move, but can afford the home?

The bank also checks out the offer price to see if that is the current fair market value, and to see if there is any suspicious attempts to defraud the bank.

Another snag that can come up is often there is not just one bank that has to agree to the short sale price. There can be many lien holders that must all agree to basically give up their interest in the property. This includes 2nd mortgages, securitized asset holders (Fannie Mae or Freddie Mac) and even private mortgage insurance companies. Getting all those people to agree is very tricky and time consuming.

Closing on time, or actually closing at all, is always questionable. It’s a frustrating process in most cases, so you need to be very flexible on move dates, and a lot of patience when making offers on short sale properties. Those looking to close fast, or need a set date should avoid looking at short-sales.


Once a house has been foreclosed on, it is a much simpler process. These are known as bank owned, or REO properties. There is now only one owner (generally the bank) and all other liens against the property have been wiped out. When making an offer on a true bank owned foreclosure, you will usually get an answer on your offer in just a few business days.

Short sale and foreclosure rate quoteThere are many things to think about when buying a foreclosure. For instance, how long has the house been sitting vacant? In most cases, it will be at least six several months, sometimes a year or more. A Minnesota, Wisconsin, and South Dakota winter can be very hard on a vacant house. Many are not heated and the utilities have been shut off for a long time. Beware of hidden condition issues.

People commonly talk about buying HUD HOMES. A HUD Home simply means the homeowner who was foreclosed on had an FHA loan. There is nothing special about a HUD Home.


The next concern is you getting a loan on the foreclosed home. Generally speaking, the home needs to be habitable at the time of closing. This means you could move in right away, and safely live there. Water, heat, bathrooms, and kitchens all need to be working, and there are no major health or safety issues.

If the home needs significant repair, there are few options. One of them is the FHA 203k program. This program DOES allow you to purchase the home and get the funds needed to fix it all in one new loan. This sounds great, and it is, but you are NOT allowed to do any other work yourself.  It must all be done by licensed contractors.  Call us to discuss the finer details of how FHA 203k loans work.

When it comes to short sales and foreclosures, a licensed experienced loan officer, and an experienced real estate agent are your best friend and super critical to make sure you are not buying a money pit!


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Our services available only for properties located in Minnesota, Wisconsin, and South Dakota. Licensed as Mortgages Unlimited, Inc. NMLS # 225504. Joe Metzler NMLS # 274132. As a Lenders One partner, we are part of the 3rd Largest Retail Mortgage Originators in the country. We are consistently ranked as one of the top mortgage lenders in Minnesota by Minneapolis St Paul Business Journal. Any use or duplication of any materials is strictly prohibited.  All images, text, and materials Copyright 1998 - 2019 Joe Metzler. This is the private web site of Joe Metzler, NMLS #274132. All Rights Reserved. Irish Rosemount High School Boys Soccer