Short Sale? Foreclosure? Bank Owned? HUH?
I had a friend say “What does REO mean? I’d like to know!” And it dawned on me that I needed a Glossary for real estate terms related to distressed properties:
Short-Sale: A short sale is when the mortgage company agrees to accept a mortgage payoff that is LESS than the current loan balance (sometimes, but not always, between $20-$100k). Here, the seller/homeowner is still involved in the process of finding an agent and trying to sell their house for as much as they can.
Foreclosure Auction: An auction takes place when the bank has taken possession from the defaulting sellers, and places the home up for bids – beginning at the loan balance, interest, fees, and any liens associated with the property.
When/if this is unsuccessful…
Real Estate Owned (REO): After an unsuccessful auction, the property will revert back to possession of the bank, at which time they “own” the property and place it up for sale. Sorry, no speedwagon here!
In my experience, you can’t say any sort of definites about any of these processes. Some REO properties can take months to get a contract, or even close, while some can take a few days. There’s no guarantee, since every Bank is different and they each have different processes.