I was asked more often nowadays these terms and how they work. Even first home buyers will ask me if I could help them to buy short-sale, REOs and whether they are good deals. So here I am going to share with you my take on these different real estate for sale.

Auction, a.k.a, trustee sale. It happened after a certain period of notice of default was sent to the owner and before the house became bank owned property. Auction is held everyday outside the supreme court and you have to pay cashier check for properties you buy there. You should do a thorough research to find out the liens for the house you want to buy and the conditions. Many times, you are not able to see the inside of the house. Therefore, there are higher degree of risks involved in these transaction.

REO (Real Estate Owned), a.k.a bank-owned, foreclosure houses. If a house cannot be sold at the auction, it will then become a bank-owned house. Bank owned houses are usually listed lower than a regular sale house on the market. However, listing price is one thing and final sale price is another thing. More and more people go to bid for bank owned houses and many times, a bank owned house receive so many offers and the final sale price was thus pushed much higher. There are also more all cash offers received for bank owned houses. We noticed that often times, bank would rather take an all cash offer with lower price. Therefore, do not feel suprised when your offer is not accepted and later you found out that the house was sold for less than what your offer price.

Short-sale refers to houses may sell for less than what the owner’s mortgage amount. Short-sale is the most time-consuming transactions because it involves the lenders approval. In this case, it’s not enough that your offier is accepted by the seller. The banks who own seller’s mortgage need to approve the deal too. Depends on who are the lenders and how many lenders involve, it could take quite a few months. Currently, a short-sale has only one lender takes around 3-4 months from the offer submitted to final approval. With two lenders, the process can be prolonged to 6-8 months. Again, don’t be fooled by short-sale’s low list price. The low price for short-sale helps seller to get offer fast. Only with an offer in hand, can the lender start the approval process. Lender will look at the market price dring the approval process. It’s not unusual for the lender to ask buyer to increase the offer price for an approval. The key to short-sale is patience. From time to time, the person whose offer is initially accepted may drip out as they bought other house while waiting. Therefore, if you are willing to wait, you might be the final winner.

If you are interested in buying bank owned or short-sale houses, email me or call me at 408-799-2558