REO / Shortsales
Real Estate Owned (REO)
An REO is Real Estate Owned Property which is property in the possession of a lender as a result of foreclosure or forfeiture.
The advantage is obvious. The banks main objective is to get the homes off of their books as quickly as possible, so they will often under price the property and close in a timely manner.
The disadvantage is the property most often will require an “as-is” sale. In many cases, when sellers realize they are about to lose their homes through foreclosure, it’s not uncommon for them to stop caring about the home. Therefore, the condition of the home may be less than desirable. In addition, the pricing of the property can result in a multiple offer situation.
A short sale occurs when a property is sold and the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed.
The advantage to purchasing a short sale would be the often discounted price. Sellers are eager to aggressively market the property in the hopes of a quick offer. Also, access to the history of the home is available through the current seller.
The biggest disadvantage to purchasing the short sale is the amount of time it can take to get a response from the bank once an offer has been submitted. It is not unheard of for a short sale to take weeks or even months longer than a standard sale. In addition, because short sales are often priced very competitively, there may be a multiple offer situation.