Short sales, REO’s, Foreclosures, Auctions and…….
It is a little confusing out there these days for the lay person who does not know all the “new” vocabulary in real estate. It might seem like word soup or you might think you are back in foreign language class conjugating verbs. Actually, most of this vocabulary is not really new but so much of
it was never or hardly used in the last ten years. Well it is back now and it helps to understand what you are looking at.
Here is a quick guide for you:
Short Sale: This happens when the owner wishes to sell their home for less than the amount that the bank is owed. Everything happens just like a normal sale right up until a buyer submits an offer. Then there is a process of getting the lender to accept the deficiency or shortage between what they are owed and what they will actually receive. This process can take up to 120 days and usually the seller will remain in the home until it is finished.
REO: This stands for Real Estate Owned by Lender. This is the status of a property after the full foreclosure happens and the bank has physically taken the property back. Realtors will often use this term and you may see it in advertising though the term bank owned is much more common.
Foreclosure: The process by which the bank takes back a house after the payments have not been made as agreed. In our market here the process usually starts after 3 months of no payments. Confusion comes about when people talk about properties being “in foreclosure” a home can be in that state for many months before it is actually foreclosed and thus bank or investor owned.
Auctions: Confusion with this word usually centers around the auctions you see advertised at hotel ballrooms and convention centers vs the auction that takes place on the courthouse steps as the final phase of the banks foreclosure on a property. The first type of auction is usually investors or banks who have grouped a bunch of properties together and are trying to move them as quickly as possible. The courthouse steps type of auction is reserved for the properties that are in that very last phase of the foreclosure process.