By definition, a Short Sale occurs when the seller (the homeowner) owes more money on the loan than the sale of the property will likely bring on the open market and they are unable or unwilling to bring the difference to closing. In such a case, the seller can request that the bank (mortgage lender or servicer) approve a short sale, or an amount less than what is owed. These are also know as "pre-foreclosure" sales because the transaction must close prior to foreclosure, or when the property is auctioned to the highest bidder.
Here are a few things to consider when attempting to purchase a short sale property: (1) Short sales are difficult and time consuming so be sure that you use an experienced real estate agent who is adequately trained and has appropriate certification. (2) Although the homeowner is the seller, all short sales are subject to lender approval. Most lenders want to close within 30 days after final approval so you must be ready to move forward very quickly.
An REO property (real estate owned) is one where there was not a successful short sale and the property goes all the way through the foreclosure process. The ownership of the property has been transferred involuntarily to the lender and is subsequently put back on the market.
The most important things to remember about REOs are: (1) The lender is the seller and they require that their own contract addendums be used. Make sure you understand the terms and conditions of the sale. Consult an attorney if necessary! (2) Most REO properties are in need of signigicant repair and, therefore, present challenging mortgage issues for buyers. An experienced REO agent can help you get special FHA 203k financing to take care of both the purchase and the renovation.
A HUD property is one where the federal government's Housing and Urban Development has taken ownership of a property via the foreclosure process. As you would expect, the government has very strict rules for anyone wishing to purchase a HUD property.
Here are a few things to keep in mind when considering a HUD purchase: (1) You must use a HUD approved real estate broker for the purchase. (2) HUD uses a sealed bid process that is both time and date sensative. (3) If you win the bid, your agent will have only 48 hours to submit all paperwork and addendums so be sure everything is ready upfront. |
