Foreclosures defined

“What is a short sale?”

This is the most common questions we hear today as REALTORS®. Short sales, foreclosures, REO’s, bank owned properties – all of these terms can seem confusing. Here is a basic explanation of the terms we are questioned about frequently.

Current market conditions have created many different buying and selling scenarios under the banner we call foreclosures. It is important to understand the meaning of several different terms in order to be an educated buyer or seller of distressed properties. Above all, consumers should look to an educated Realtor® for assistance with these types of sales. Information regarding how distressed property sales are handled is very different for EVERY transaction. We have provided a guide for Sellers and Buyers which consists of very general information about the process. If you are a Seller or Buyer with a distressed sale need, we urge you to contact us directly to discuss your specific situation.

Definition of Terms:

Short Sale: A procedure in which the lender allows the owner to avoid foreclosure by selling the property for less than the outstanding balance of the loan.

Pre-Foreclosure: During this stage prior to foreclosure, the seller may have options such as loan modification, short refinance, deed in lieu of foreclosure and short sale.

Foreclosure: The legal process by which the owners right to a property is terminated. Property is sold at sheriff sale and owner must vacate the property.

REO (Real Estate Owned): A property which is in the possession of the lender as a result of foreclosure (after sheriff sale) or forfeiture.

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