Unless you are a real estate agent, it can be easy to get confused with all of the different terms that are used throughout the real estate process. Knowing what all the terms mean can help to make sure that you are not getting into the wrong situation and are not having problems with your home. While a short sale, foreclosure, and REO are connected, it is important to make sure that you know the difference between them.
A short sale happens is when the property appraises for less than the amount the seller currently owes on his mortgage or mortgages. The seller’s lender or lenders agree to accept a lesser amount for the payoff of their mortgage or mortgages than what the seller actually owes to them. In most cases, the seller is usually delinquent on their payments or in foreclosure. In the short sale transaction, the seller cannot receive any proceeds. The short sale process can take up to several months to close escrow.
An REO is a (Real Estate Owned) property is when the lender has foreclosed on a property and is unable to sell it at auction. The lender, who is the seller now, will employ a real estate office to list the property. The property is listed with special restrictions and rules as set by the lender. If a buyer makes an offer on an REO, this offer is submitted to the lender and has to be accepted by the lender. The process can take several weeks or longer to get acceptance and to close escrow.
A foreclosure is the process in which the lender acquires title to the property due to the owner defaulting on the monthly payments of that mortgage.
For all of your real estate needs in Southern California to make sure that you do not end up with a short sale, foreclosure, or REO, contact Eastland Escrows in Covina, California.