I am often asked one of the following questions... What is a short sale? What is an REO?
Why am I being asked these questions so much lately? Because foreclosures are a force in the Fredericksburg real estate market now. I did a quick, cursory search in the MLS before writing this post to see how many foreclosures are in the Fredericksburg area. My quick search netted 413 foreclosures. If I were to do a detailed search, I think the number would be considerably greater.
The fact of the matter is that somewhere between 12% and 20% of homes for sale in the Fredericksburg, Virginia area are in some stage of foreclosure situation. That is a frightening statistic. But here is the other consideration from a seller standpoint... foreclosures are partly responsible for driving ALL home values down.
But today's topic is Foreclosure Terms. So, here are the common terms that are now strongly relevant:
Foreclosure - The lender invokes the "Power of Sale" and auctions the property. The owner is in default. The property is often auctioned at the courthouse steps.
Real Estate Owned (REO) - The lender has purchased the property back from the foreclosure sale, then offers the property for sale. These are often listed through traditional means with a real estate brokerage. The Bank is now the owner and seller of the property.
Short Sale - This is a situation in which the lender will accept a payoff of the mortgage for less than is owed. This is much more common than ANYTIME in many years, because of the falsely inflated market of 2004 and 2005. Prices dropped in late 2005, 2006 and 2007 resulting in current market value being less than what was borrowed.
If you are a buyer, some of these situations offer some strong value opportunities. If you are a seller who is struggling to get their home sold, or is facing serious financial struggles regarding your mortgage, you need to educate yourself on these terms and how they can affect you. Let me know if you need additional information.
Jeff Edmisten
The Edmisten TEAM
Keller Williams Realty
jedmisten@kw.com
(540) 538-7222
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