Foreclosure involves a lawsuit in which a bank,
mortgage company, or other lien holder seeks to take an owner's property to
satisfy a debt. The bank or lender may actually take ownership of the
property or have the property sold to pay off the debt. As a result of the
foreclosure, the owner loses whatever rights he or she had in the property. |
|
 |
A short sale typically is executed to prevent a home
foreclosure . Often a bank will
choose to allow a short sale if they believe that it will result in a
smaller financial loss than foreclosing. For the home owner, the advantages
include avoidance of having a foreclosure on their credit history and the
partial control of the monetary deficiency. Additionally, a short sale is
typically faster and less expensive than a foreclosure. In short, a short
sale is nothing more than negotiating with lien holders a payoff for less
than what they are owed, or rather a sale of a debt, generally on a piece of
real estate, short of the full debt amount. |
|
|
Real estate owned or REO is a class of property
owned by a lender
, typically a bank , after an unsuccessful sale at a
foreclosure auction. This is common
because most of the properties up for sale at these auctions are worth less
than the total amount owed to the bank. The minimum bid in most foreclosure
auctions equals the outstanding loan amount, the accrued interest and any
costs associated with the foreclosure sale including attorneys' fees. After
an unsuccessful auction, the bank will go through the process of trying to
sell the property on its own. It will remove some of the liens and other
expenses on the home and try to resell it to the public, either through
future auctions or direct marketing through a Realtor. Generally speaking,
bank REO properties are in poor shape in terms of repairs and maintenance;
however, real estate investors will often go after these
properties as banks are not in the business of owning homes and so, in some
cases, the low price can more than compensate for the condition of the
property. |
|
