If you're thinking of making an offer on a home and you're told it's a foreclosure, short sale or bank-owned you can nod your head. But do you know the differences? With so many real estate terms being bandied about sometimes confusion takes over. It's important to know what these terms mean, both as a buyer as well as a seller.
A home that is in foreclosure can either be bank-owned or still owned by the distressed seller. If the foreclosure has already taken place and the bank owns it outright then it's called a real estate owned, or REO property.
If a home is in the foreclosure process yet has not been completed is not yet bank owned. The seller still has time to sell the property and avoid the foreclosure. If you make an offer on a home that is currently in foreclosure, the foreclosing bank will want to make sure you're preapproved by another lender before holding off on further foreclosure action.
A short sale is neither a foreclosure nor an REO. A short sale is a term used when a bank has agreed to accept a lower amount that what is currently owed on the property. This occurs when a homes value or sales price is lower than the current mortgage balance. For instance, a home is currently valued at $200,000 yet the mortgage balance is $300,000. For a seller to sell in this example he will have to bring in the difference between $300,000 mortgage ฝากขายทาวน์เฮ้าส์ balance and the sales price. That won't happen.
Realizing current market conditions a bank might agree to a payoff of $200,000 in order to get the property off of their books and at least get something for the property instead of foreclosing on the home and reselling it in the open market. A short sale can be in foreclosure or not but is not a prerequisite in order to be a short sale. There you have it. Now you know!
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