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What's the difference between a Foreclosure, Short Sale and REO?

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July 14 2010 - Fresno
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A short sale occurs when the lender agrees to take less than the full loan payoff of an owner's property. The homeowner is most likely behind on payments and owing more than the home is worth.
Foreclosure is where the bank takes possession of the property because of non-payment for a long period of time or an unapproved short sale.
An REO is a bank-owned property, when homes go into foreclosure they are sold at a trustee sale, if no one purchases it at the trustee sale, they become REO properties. Later they are often listed by Realtors hired by the bank.
Hope this information clarifies.
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July 14 2010
Foreclosures and bank-owned and REO essentially mean the same thing - the bank owns the property and they want to sell it. In my experience REO sales can close escrow nearly as fast as a regular sales transaction. Here in San Francisco that's a 30 day time period, so for an REO maybe you give yourself 45 days.
Short sales are properties still owned by the borrower who owes more on their mortgage than the sale of the property will procure. That means the bank has to sign off on taking less than what they are owed. Let's just say that the banks take their sweet time.
As an example, I wrote offers with 2 different clients on 2 different short sale condos in my area back in February of this year. It is now July, 5 full months later, and the banks have yet to respond to either offer. Frustrating is the best word to describe buying a short sale. The good news is that you can keep looking at other properties while you're awaiting the bank's approval.
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July 21 2010

Make an appointment with me, so that I can explain each one and also inform the advantages if you are a buyer

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July 20 2010
If you are a real estate professional and did not know the difference, please change brokers!
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July 20 2010
A foreclosure is a term used to described the process when a borrower is in default.  Some folks believe they can purchase a property as it is going through the foreclosure process.  As mortgages are not assumable...I'd like the folks who are selling lists of properties that are going through the foreclosure process to explain how a layman can buy these homes during the process????? 

An REO has gone through the foreclosure process...known as real estate owned or bank owned...sometimes referred to as corporate owned...ie, the bank is the corporation that now owns it.

A short sale is when the borrower who is in default gets permission from their lender to sell the property for less than what is owed through an arms length transaction with the assistance of a licensed agent experienced in these types of transactions.   A short sale is granted when the only other recourse for the lender to consider is to foreclose on the property.
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July 15 2010
Your question is answered perfectly on my website.  Click on my profile to go there.  Though, most of it has already been addressed here.
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July 14 2010
A short sale is when the homeowner owes more than what his/her home is worth. A foreclosure and REO are the same thing, which is a bank owned property.
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July 14 2010
Natalie's answer addresses your question, nothing else to add. 
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July 14 2010

A little more info...Short sales have a misleading name.  They usually take a long time for the bank to approve the sale.  Short sales and bank owned properties are usually sold "as is".  bank owned properies are usually as easy to buy as regular home sale.  Banks make no disclosures about the property since they have never lived there so inspections are very important. 

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July 14 2010
 
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