In today’s real estate market there are an abundance of homes that fall under the category of either a Short Sale or an REO. What is a short sale? A
Short Sale is where a homeowner owes more money on the house than the current market value of the home and the homeowner has decided to sell the property but doesn’t have the money to pay the difference between the loan balance and sales price. The borrower can either
contact the lender directly or a company like
Vivix Credit Solutions that specialize in short sales to make a request to sell the home for less than the outstanding balance of the loan without having to pay the lender the difference between the loan balance and the sales price of the home. Short sales may be considered a foreclosure by the lender, but not in all cases. So, a borrower may be able to prevent having a foreclosure on their credit by completing a short sale versus foreclosure, but ultimately it is the lender’s decision on whether they report the short sale as a foreclosure or not to the credit bureaus.
What is an REO? An REO is a home where the bank has taken ownership of a home from a borrower usually due to foreclosure; however, the bank is selling the home on the open market rather than selling the home through a foreclosure auction
.
The Market Today
In today’s market, due to the volume of distressed homes, short sales take much longer to close than the traditional 30-45 day home buying process. Short sales have multiple entities including, the seller/homeowner, the lender, and the investor in cases where the bank sold the loan to another party. All of the parties have to agree to the
terms of the short sale offer made by a prospective buyer to complete the sale. Another factor that can increase the complexity of buying a short sale home is if the seller has two mortgages on the property as opposed to just one. So, short sales typically take four to eight months to complete. REOs typically will be completed in shorter time frames than short sales, but an REO sale is typically sold by the lender as an “as is” property. So, prospective buyers that are looking to get a discounted price on a home must be aware of the terms of the sale and the condition of the home. Whether a prospective home buyer is looking to purchase a home that is listed as a short sale or an REO, the borrower may want to use a realtor who specializes in these processes and has a business relationship with companies such as Vivix Credit Solutions to help the borrower negotiate and facilitate the short sale process. Experience in this highly complicated niche is invaluable when there is so much at stake. Also, homeowners that are in the unenviable position of needing or wanting to short sale their home, can do it themselves, but given the complexities of the deals and time frames involved, they will likely have more success with the assistance of companies like
Vivix Credit Solutions who outsource this service to affiliate realtors within their network to facilitate and manage the short sale process.