Search Assistant
Search for Real Estate for Sale...

Area Resources
Real Estate Services

About the Des Moines Market

Homebuilders Association of Greater Des Moines

Home Inspection

Our Community

Articles & Tips

Whatever your Real Estate needs or interest, we have information that can help! View Articles

For Advertisers

Current advertisers login here.

To learn more about advertising in this magazine, click here.

About This Magazine

About Us

Find a Magazine

Homes & Land Magazine Directory

Relocation to Des Moines


Home Experts - NEW Section! Great Home Advice

Find a CRS RealtorĀ®

Market Update - Des Moines, Iowa

For Agents

Order a Magazine

Information for Advertisers

NEW Home Experts Section

Follow Us on Twitter

Become a Fan on Facebook

Hot Topics

Understanding Short Sales & Foreclosures

In these crazy economic times, the terms “short sale” and “foreclosure” creep into our real estate vocabulary much more frequently. Today we are going to take a look at both and what they mean for buyers and sellers.

Short Sale
A short sale occurs when a property is sold and a lender agrees to accept less for the payoff than is actually owed.

In normal market conditions, short sales represent a small segment of mortgage defaults. Lately, the number of short sales has been on the rise. In part, because lenders are inundated with foreclosures, and when evaluating their situation, a bank may allow a short sale if it results in a smaller financial loss than foreclosing.

Sellers need to be very careful when agreeing to a short sale with their lender. The difference between what is owed on
the mortgage and what the house sells for on a short sale must be accounted for. This can be loaned to the seller in the form of a promissory note, which must be repaid, or, the bank will report the difference as 1099 income.

Buyers beware as well, short sales are never quick, and aren’t governed by any sort of regulatory agency. They are a hybrid transaction between the buyer, seller and the bank. They usually take a lengthy amount of time to close, and if a better offer comes in on the property at any point during the transaction, the bank will likely take it, and you will be left to increase your offer or search for a new property.

“Buyers most suited for short sales need to have a high degree of flexibility, the ability to deal with uncertainty, and the willingness to accept the possibility of not buying the home if the bank and the seller can not come to terms,” explained Doug Burnett, Broker/Owner of Burnett Realty.

A foreclosure is the process by which a lender takes ownership of a property.

As we have seen more and more lately, when a home owner fails to make their mortgage payments, their lender may begin foreclosure proceedings. This process is governed by the laws of the state in which the property is located.
Here in Iowa, the foreclosure process typically takes 4-6 months, and may occur with or without redemption rights. Thirty days prior to starting the foreclosure process, the lender delivers written notice of default to the borrower. If the borrower doesn’t remedy the amount in default by the date specified in the notice, the lender may start the foreclosure process.

The county Sheriff’s office conducts the sale of foreclosed properties, after notice of the sale has been published in at least three public places and two weekly notices have appeared in the local newspaper. The first notice must appear at least 30 days prior to the Sheriff’s sale.

For buyers, foreclosed upon properties pose risks, which is why most are purchased by experienced investors. When you purchase a home in foreclosure, it could be at risk for serious problems including: title issues, IRS liens, tenants or owners refusing to give up possession of the property, or structural issues. It is best to have these issues investigated by Realtors®,
attorneys and title companies.

“The price may seem good at auction, but unless you have experience, purchasing a foreclosed property is risky. Anyone considering purchasing a foreclosed property should have a qualified team of professionals to advise them.” stated Doug Burnett.

Information courtesy of Burnett Realty. For more information on short sales and foreclosures, don’t hesitate to contact your Burnett Realty agent at 515.334.4900, or email