What is the Difference Between A Short Sale and A Bank Owned Property?
Short Sales and Bank Owned Properties seem to become more familiar terms in the real estate market but what is is the difference between them?
Currently there are 639 Active Homes For Sale in Saratoga Springs, NY. Approximately 21 of these properties are a short sale and 3 are bank owned.
In a short sale, the current owner still owns the title to the property. In many cases the owner may still reside in the short sale property. There are two basic scenarios that causes a property to become a short sale. The first being the owner has defaulted on their mortgage loan and the home's market value is less than what is owed on the property. Another scenario is the owner must relocate and the home's market value is again less that what is owed on the property. The bank then must agree to sell the home for less the amount on the mortgage in exchange for the release of the lien.
As a potential buyer it is important to know that the buyer will submit their offer to the owner. However the lender has the final decision on whether the offer will be accepted. Approvals can take any where from 30 days to almost a year.
Find out more information how to avoid foreclosures with a short sale.
Bank Owned or REO
The term REO is an abbreviation for Real Estate Owned. In a Bank Owned or REO sale the lender is the institute that is selling the home. The home has already gone through the foreclosure process and is now owned directly by the lender. The lender that owns the home usually has never seen it. This means there will be no disclosures on the property.
Since the lender owns the property, in a Banked Owned or REO sale, the time period for an answer from the lender tends to be much shorter. Usually the lender will respond to a Bank Owned Property or REO within a week. It is common with a Bank Owned or REO property in Saratoga Springs to receive multiple offers and sell above the asking price.
So What is the Difference Between A Short Sale and Bank Owned Property?
- With a short sale the owner still owns title on the home while with a Bank Owned or REO home the lender owns the title.
- Home buyers will not receive any disclosures with Banked Owned or REO home. The home is sold "As Is."
- The time period for a lender to get back to a buyer is typically longer with a short sale over a Bank Owned or REO property.
- Sometimes with a short sale the lender will not accept an offer and the home will fall into foreclosure.