If you are new to the San Diego area housing market, there are lots of terms to learn. From the first time you talk to a realtor all the way up through your closing, you are about to enter a whole new world of real estate terminology. Here’s what you need to know about the difference between REO properties and short sales, two terms that are often confused.
The two terms are both applied to homes that are in foreclosure. If a mortgage payment isn’t paid on time and in full every month, trouble starts to brew. Miss more than one or two payment in a row, and you’re really getting into hot water. The procedure varies from bank to bank, but missing more than one payment usually puts you into a state known as pre-foreclosure.
When a homeowner finds themselves in pre-foreclosure, they still have a few options. They can borrow money from a family member and pay up their debt. They can set up a payment schedule by negotiating directly with their bank. Another option open to them if they want out of their mortgage without the financial scars left from a foreclosure is a short sale.
In a short sale, a homeowner in trouble allows a real estate agent to negotiate a price for the quick sale of their home with an interested buyer. A short sale gets the buyer a great deal on a home and saves the old homeowner from the financial ruin of foreclosure. There’s a catch, though. The bank that holds the mortgage must agree to the deal. That’s where a good real estate agent is very helpful in the situation.
If the bank doesn’t agree to a short sale and the homeowner isn’t able to find a way to pay their mortgage, the house usually ends up in foreclosure. This is when its ownership is officially turned over to the bank, which makes the home designated an REO property. An REO property is the same thing as a bank owned property in the San Diego area.
Essentially, the difference between a short sale and an REO property is whether or not the home has been foreclosed on yet. In both instances, prospective home buyers are able to find great deals on both types of homes. However, the going is never easy when it comes to negotiating with banks that are losing money.
Whether you want to go after REO homes or short sale homes, you need an expert real estate agent to stand by your side. Be sure you don’t get caught up in bidding wars that result in you overpaying when you once thought you were getting a great deal. Plus, even finding the right person to talk to at the bank about short sales or bank owned homes can be impossible without the right experience and credentials.
Another consideration to think about is the fact that some foreclosures don’t end well. When people can’t pay their mortgages and their homes are repossessed, they are usually less than happy. They may damage the property by punching walls, letting sinks and bathtubs overflow or even by coating the walls and door handles with less than pleasant substances.
When you help a person out of a home debt they can’t repay, the homeowner is often filled with gratitude. You are freeing them from their oppressive mortgage. When you get an REO property, you get the home in “as is” condition. Make sure you talk to your real estate agent about which type of property is best suited for you.
Kari Shea is a real estate professional with Shea Real Estate & Investment Groupwww.shea-realestate.com.
[tags]short sale, reo,real estate owned,property,San Diego[/tags]
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