REOs Foreclosures Short Sales OH MY – by Susan Duncan BrokerRealtor
REOs. Foreclosures, Short Sales, Oh MY!!!!
by Susan Duncan Broker/Realtor
A bunch of words that are interchangeable, right? No – that’s not right. Although many people use those words interchangeably, they are all three quite different.
First lets talk about Short Sales. When someone is behind on their mortgage payments and there is a HARDSHIP, the bank holding the mortgage may allow the owner to do a Short Sale. A Short Sale means that the home owner owes more on the home than what the market is willing to pay and the bank who is holding the mortgage is allowing the home owner to do sell the home for less than what is owed.
In most cases, these homes are sold “as is”. That is because the bank is not going to fix repairs because they do not know the home. The seller cannot afford to fix the repairs because they do not have the money – so the buyer is purchasing the home “as is” in most cases.
Because of the fact that the home is still in the sellers name, when a short sale contract, contingent on bank approval goes to the bank, it may take 2 or 3 months for the bank to make a decision as to whether they will approve this short sale or not. There has to be an appraisal on the home. Then, assuming the bank is in agreement with the offer, it goes to the Private Mortgage Insurance for approval. All of this can take considerable time. NOTE TO SELF: Short Sales are not for the buyer who needs to close in 30 days. Short Sales are for the patient buyers who have time, much time.
Right now, 50% of the homes that my company is listing are Short Sales. It is not because we go after Short Sales, although we are educated in them and know how to help the home owners. But it is because this the new “Foreclosure”. Banks are realizing that it is better for them to have someone in the home, maintaining the home even if they are not able to make payments on the home, than to foreclose on the home and have it come back into their inventory to maintain and have no clue as to how it may take for that home to sell 6 to 12 months from now.
The term Foreclosure and REO’s are words that are used interchangeably in the lay person’s world, but among realtors they are two different entities. REO is an acronym for “Real Estate Owned”. Not very descriptive is it? “Real Estate Owned”?? Shouldn’t it be “BO” for “Bank Owned”?? You betcha! But did they ask us???? REO’s are the homes that have gone back to the bank. The sellers got behind on their payments and the bank took the homes back and now the bank is responsible for the maintenance, property taxes, Home Owners Association Dues on the property.
Now, let’s talk about Foreclosures. This term has many uses. It is the umbrella for which all distressed properties fall when talking about distressed real estate, and many times the word “foreclosures” is used when one is referring to “Bank Owned” properties.
As Realtors, we use the word “In Foreclosure” when we are referring to a home that is still owned by the home owner, maybe they have tried a Short Sale or maybe they were not aware that was an option and they just felt hopeless and walked away. “In Foreclosure” means that the home owner has been issued a “Notice of Hearing” , a time for the home owner to go to the Clerk of Court in their county and to possibly request an extension, a chance to have the opportunity to do a Short Sale. In many cases, if the Bank’s attorney, who is present, and the Judge feel that the home owner is trying to sell his home, they will grant a 30 to 90 day extension on the foreclosure.
If the home owner does not show up for the hearing, or there is no reason to delay the foreclosure, in Henderson and Buncombe Counties, the foreclosure is usually scheduled for 20 days from the Hearing date.
So the word “foreclosure” is actually the process of the home becoming “bank owned”.
I hope this video has been helpful – to view more videos regarding distressed properties, please go to www.BestBuysInAsheville.com or call Exit Realty Vistas at 828-333-4793.
South Asheville Real Estate Expert – Susan S. Duncan, Exit Broker Owner
Your real estate marketing expert for the Asheville, Hendersonville, Fletcher NC areas. Providing the most comprehensive real estate site for all of the Asheville area is our goal! (828)776-8100. Exit Realty Vistas