foreclosure and short sale
The term “foreclosure” means a property that the financial lending company has taken back from the property owner. Generally this happens when the property owner fails to make payments to or meet other obligations to the lending company.
The lending company takes possession of the property title from the owner by first filing a notice in court that the property owner is in default. The property owner is given some amount of time and is given the set of circumstances that the owner must meet in order to prevent foreclosure.
If the property owner fails to meet the demands of the lending institution within the time frame alloted, then the lending institution takes a second action in court which results in the title of the property being transferred to the lending institution and the “property owner” no longer owns the property. It is then termed “foreclosed property.”
Foreclosed property is often referred to as REO which means Real Estate Owned and it is the property that the lending institution now owns. It is also referred to as Bank Owned.
The financial institutions want to sell the properties that they have foreclosed on and they will generally negotiate a very good price. However, they are almost always sold “AS IS” which means that the buyer must be very careful about having proper inspections performed on the property and on the title.
It is very wise to use the services of a REALTOR® to represent you in purchasing foreclosed property.
What Is a Foreclosure?
What Is a Short Sale?
A Short Sale is a property being sold by the property owner for a price that is less than the total amount owed to the lending institution.
Generally, the property owner recognizes that he/she are not going to be able to meet their obligations to the lending institution. So they take action to sell the property before the lending institution executes foreclosure.
A Short Sale involves the lending institution having to agree to the sale price since the lender is going to take a loss.
The purchase of Short Sale property (getting to closing) can take a much longer time than the normal purchase of property since there is much negotiation that needs to take place with the lending institution.
Another factor is that there may be two (2) mortgages on the property and both lending institutions have to agree on how they are going to split the sale proceeds.
It is very wise to use the services of a REALTOR® to represent you in a Short Sale.
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