In this distressed market we’ve had to become familiar with new terms and new ways of doing business. Maybe I can help take away some of the mystery. Keep in mind that these are Karolyn’s Simplified Versions……
FORECLOSURE: When an owner is behind in mortgage payments the lender can begin Foreclosure. From the day formal notice is served, the owner has 120 days to bring his payments current or the property is sold to the highest bidder at a public sale. The highest bidder is almost always the lender because he has more invested in the property than a private party is willing to pay.
SHORT SALE: When an owner needs/wants to sell and he owes more than his property is worth, the owner can try to negotiate with the bank to accept less than full payback for his loan. Keep in mind that the owner may or may not be in Foreclosure during this process. There are lots of ins and outs with Short Sales that will be covered in future posts.
REO: These properties are Bank Owned. They have been repossessed and the seller is now the bank. The properties are traditionally low priced because the banks are anxious to get them off their books. The banks have their own time frames, forms, and procedures.