Omaha Home Buyers Want to Know: What's the Difference between a Short Sale, a Foreclosure, and an REO?

Omaha Home Buyers Want to Know: What's the Difference between a Short Sale, a Foreclosure, and an REO?

Short Sale

A short sale is when the homeowner owes more on their home than it is worth and in order to sell it they are asking the lender to take a loss. Why would lenders do this? Simple, they want to avoid foreclosing which is a costly and time-consuming process. In order to qualify for a short sale the homeowner must demonstrate a hardship, or reason why they cannot afford the home. The process of getting a short sale approved is a long one. When an offer is accepted on the property it is sent to the lender for their approval. It can take from three to six months to get an answer back from the lender. Because of this most buyers are not interested in looking at short sales.

Foreclosure

A foreclosure is when a lender forces the sale of a property in order to satisfy a delinquent mortgage. Notice of the sale must be posted publicly and the sale must be advertised in print once a week for four weeks. On the day of sale the property is auctioned to the highest bidder and the proceeds are applied to the lender's debt. The foreclosing lender will be there and will bid the amount owed. The winner bidder gets the property and title as they are at the time of sale. There will likely be repairs needed, after all the owner was forced out and probably not too happy about it so may have removed fixtures or caused damage intentionally. There could also be other liens against the property that the buyer is now responsible for.

REO

REO is an acronym for Real Estate Owned. It is a term used by banks that refers to a property that was foreclosed on in which the bank was the highest bidder at the foreclosure sale and now the bank owns it.The lender will sell these properties in "as is" condition. Repairs will likely be needed but the title will be clean. An offer submitted to buy an REO property will get a response in a couple of business days. Once accepted the lender will want to close the sale within 30 days.

There are short sales, foreclosures, and REO homes in all parts of Omaha. For more information on buying these types of properties in the Omaha area, contact the Trumm Team at 402-943-9494 or www.TrummTeam.com.