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Feb 14 2012

What is the difference between REO, Forclosure, short sales?

Posted by Usual in Short Sales, tags: , , , ,

I am going to start looking at some houses but I don’t know what these options are? Which one is the best or the better choice?

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This entry was posted on Tuesday, February 14th, 2012 at 8:56 pm and is filed under Short Sales. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 Responses to “What is the difference between REO, Forclosure, short sales?”
  1. haygirlc says:
    February 14, 2012 at 9:27 pm

    REO is a bank-owned home (Real Estate Owned), basically a foreclosed home. A short sale is still owned by a private party who is trying to sell the home with bank’s approval to settle for less than the debt on the home.

    Honestly, the best choice for a first-time buyer is a normal sale. The hype involved with getting a “great deal” on a foreclosure is a sales pitch. If you have a contractor in the family or cash to burn, rehabbing one of these REOs may be a good investment. But buying either a bank-owned property or a short sale often limits your ability to inspect the home and obtain background info. Furthermore, the bank will set the terms either way, usually it’s as-is without any perks or negotiations in favor of the buyer.

    Another item to consider is your lender’s requirements. If you are buying with cash, no problem! If you are trying to go with FHA or other lender, many REOs will not qualify due to the poor condition they have been left in.

  2. Ed Atun says:
    February 14, 2012 at 9:53 pm

    A house that is behind on their mortgage payments is “in default” on their mortgage. At some time it will go back to the bank if they don’t pay what they owe. During this default period, the owner can try to sell the house for less than the amount of the loan. The difference is the “short” amount. This is a short sale.
    A homeowner who does not pay up will have the house go up for auction. This is the foreclosure. It happens on the courthouse steps. No one bids because you must pay cash at the auction.
    After the foreclosure auction, the bank owns the house. They hire a realty broker and the For Sale sign goes up. Since it is owned by the bank they call it Real Estate Owned. REO. A buyer can buy it just like any other house except that the bank wants the buyer to know that the sale is “as is” with no repairs. This is the best choice for a buyer if they have money for the repairs. You generally can not borrow the “fix up” money..

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