| The terms foreclosure, REO and short sale may | | | | you decide which one is right for you. |
| seem to be confusing when you hear them for the | | | | When you look at foreclosed properties, they often |
| first time. However, identifying the difference is | | | | have attractive prices but there is a good reason |
| essential if you are going to spend your well-deserved | | | | behind it. Bear in mind that the title is not clear. It only |
| money into investing. Go over this article so you can | | | | means that ownership of the property is not clearly |
| have a clear picture of the difference on the said real | | | | established. The first owner can still have rights on their |
| estate terms. | | | | old house. Other lenders may even have a stake. |
| When you talk about foreclosure, the homeowner has | | | | Then you can probably encounter back taxes. If you |
| defaulted on the loan secured by the house, and the | | | | happen to be the next buyer, you might be responsible |
| financial institution such as the bank is following legal | | | | for settling obligations to the state, country and city |
| procedures to take it back. Foreclosed homes are | | | | governments. And mind you, these things will require |
| placed in an auction, where the lending company | | | | you a huge sum of money. |
| wishes to get back all or most of their losses. Relying | | | | Alternatively, REO houses are a lot better. All liens |
| on the status of the property and the financial condition | | | | against the property have been properly organized. |
| of the bank, these properties may be priced a bit | | | | Taxes are already paid. And the title is free from any |
| lower than their real market value. | | | | past issues. In some cases, the bank has made some |
| On the other hand, the term Real Estate Owned or | | | | minor repairs on the house. However, these properties |
| REO is rarely used compared to the bank owned | | | | are expected to have a full retail value. It will all rely on |
| properties. A real estate owned property has been | | | | the amount of money the bank has tied up in the |
| foreclosed by the lending company and has reverted | | | | property. But it is safer to say that the property would |
| to their possession. Unfortunately, banks do not like to | | | | not be an REO if it had substantial equity. |
| end such transaction in this manner. Generally, the | | | | Overall, you need to be aware of these situations, |
| market value of the house simply does not include the | | | | especially if you are planning to get into with each |
| loan balance, repair expenses and other charges | | | | property. Work your network for important market |
| related to foreclosure and sale. There is a minimal or | | | | information and potential buyers, and equip yourself |
| no equity in the property. Banks are gradually | | | | with enough knowledge all the time. There is a huge |
| accepting losses to be able to keep these properties | | | | amount of money required in distressed properties. |
| on the market at higher prices, hoping to sell the | | | | However, getting a share of it needs hard work, |
| property. | | | | enough knowledge about the market and sometimes |
| If you are planning to buy one of these types of | | | | a bit of luck. |
| properties, try to consider some of these points to help | | | | |