Foreclosures & Short Sales
Foreclosure
In California, a non judicial foreclosure sale cannot occur until at least 3 months and 21 days after the recordation of a notice of default. If the owner brings a civil action to stop the foreclosure or files for bankruptcy, the process can take longer. In addition, a foreclosure sale costs the lender several thousand dollars, much more if there is litigation. Furthermore, the lender accepts a deed in lieu of foreclosure or approves a short sale, the process can be completed within days rather than months, at minimal cost and can be conditioned on the owner's relinquishing possession.
Short Sale
A short sale can be completed quickly and cheaply. Furthermore, the owner is rarely required to pay for escrow and closing costs. However with the existance of junior liens presents nearly insuperable problems; the reason is that a short sale requires the cooperation of all lenders. The senior lender has little or no reason to offer any of the proceeds to a junior lender, since all junior liens will be wiped out if the senior lender forecloses. Therefore, the senior lender typically requires that it receive all of the net proceeds of sale or that the junior lienholder be paid only a token amount. If the junior lieholder will receive nothing from a short sale, it has no incentive to cooperate.
REO
REO is an acronym for real estate owned. What this means is that the home has gone through the foreclosure process and it is now back on the market at fair market value. The property may be a bit distressed and need some TLC. Real estate owned property does have some wiggle room for a buyer to ask for credits or repairs. It is at the bank's discretion as to what the credits will be given and what repairs will be made if any. This property is usually marketed on your areas MLS.
