Bank Owned Properties or REO's
I get asked a lot, the difference between Pre-foreclosure, Short-Sales, Foreclosures, and REO's/Bank Owned Properties.
The easiest way to explain it is-
-Pre-foreclosure / Short Sale: The owner still has some say in the deal, but the bank makes the final decision. The owner owes the bank more than what they can sell the house for, and so the bank accepts a "short" or "less" amount than what is owed, and allows the owner to get out of the property. Now the owner may still be in the hook for the difference between what they owed and what they sold it for, but each situation will be different. These deals usually take the longest, so dont be mislead by the name "Short sale", thinking it will be a quick transaction.
Foreclosures /Bank Owned / REO's (Real Estate Owned): Just like it sounds, the bank has taken over the property, and they now own it, and are looking to sell it. These are usually the best deals to come across. Closing can usually happen quickly, and there are less hoops to jump through as far as paper work and waiting around for answers. In this case however, the bank is usually not likely to make any repairs, or really do much to assist the sale, other than letting it go for a very cheap price. The banks dont want these properties sitting on their books, and so they are willing to let them go for fire sale prices.
In a nutshell, that is the easiest way to describe the different kinds of deals you may come across out there. I have worked Short Sales, as well as Bank Owned properties, and they both can be easy, if you have the right people working for you.
The easiest way to explain it is-
-Pre-foreclosure / Short Sale: The owner still has some say in the deal, but the bank makes the final decision. The owner owes the bank more than what they can sell the house for, and so the bank accepts a "short" or "less" amount than what is owed, and allows the owner to get out of the property. Now the owner may still be in the hook for the difference between what they owed and what they sold it for, but each situation will be different. These deals usually take the longest, so dont be mislead by the name "Short sale", thinking it will be a quick transaction.
Foreclosures /Bank Owned / REO's (Real Estate Owned): Just like it sounds, the bank has taken over the property, and they now own it, and are looking to sell it. These are usually the best deals to come across. Closing can usually happen quickly, and there are less hoops to jump through as far as paper work and waiting around for answers. In this case however, the bank is usually not likely to make any repairs, or really do much to assist the sale, other than letting it go for a very cheap price. The banks dont want these properties sitting on their books, and so they are willing to let them go for fire sale prices.
In a nutshell, that is the easiest way to describe the different kinds of deals you may come across out there. I have worked Short Sales, as well as Bank Owned properties, and they both can be easy, if you have the right people working for you.
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