subject: What Are the Differences between REO and Foreclosure? [print this page] Home buying can be an arduous task even for the most skilled investors. Such difficulty is brought about by the economic slumps still present in most real estate markets all over the country. The real estate slumps also paved the way for an increased number of homeowners to engage in foreclosure or the real estate owned processes. If you are looking into buying either type of property, it is primarily important to distinguish the differences between these two dealings. Here are some areas where the differentiation between a foreclosure and REO are eminent: Ownership a home under the former procedure is still under the control of the homeowner while the latter establishes the lending company or bank has all the rights to the property and can dispose of it in any manner. In addition, there are different stages in foreclosure. The homeowner can still engage in short sales, meaning the house can be sold for less than the remaining debt, however if the lender agrees to do so. Process of sale foreclosed properties are sold at public auctions. Once the lender seeks assistance from the court, the officer or sheriff announces that the home is open for bidding. REO properties are listed by the bank, thus any private transaction can be pursued. Pricing foreclosed properties are priced according to the amount equivalent to the outstanding loan as acquired by the delinquent homeowner. It should not also be more than the market value of the property. Reduced prices of such homes range from $30,000 to $250,000 depending on the condition, year of construction, facilities and appliances included and location of the property. The other type of property is relatively more expensive as the lender has full control in this matter. The lenders usually do not take offers below the list price in order to recover the losses immediately. Condition of the property both property types are most probably in good condition already before put out on auction or real estate listing. Both mechanisms provide funding for the property inspection and minimal repairs to attract as many potential buyers. On the other hand, some foreclosed properties are marketed as they were. Lien attachments both properties can be relieved of such obligations depending on the negotiations between the lender and lien holders. Eviction once again, foreclosure requires assistance from an officer of the court or a sheriff while the latter proceeds with the use of only a private eviction coordinator. Further legal issues foreclosure can either be judicial or non-judicial. The former empowers the lender to sue the borrower in case the repayment of the debt has not been completed. The non-judicial process allows the lender to take advantage of the clause contained in the mortgage document, saying power of sale. The property can then be enforced to be entered in the market without a court order. Both properties have risks and advantages. The crucial success of buying either a foreclosed or REO property relies in your hands. You have to be adept in assessing an attractive auction bid or buyer offer. You have to be financially ready so as to easily respond to demands once undisclosed during the initial stages of the transaction. Also, it is important to always seek guidance from experienced real estate agents or other investors who are well-versed in either purchasing endeavor.
What Are the Differences between REO and Foreclosure?
