Just what is a REO or Short-Sale?

Author: Joe Mendoza

Who would've thought a professor, an attorney, a doctor, an engineer, even worse a BANKER not know what an REO is? I've come across all of the above and the list is growing!!!

Quite simply, a REO stands for "Real Estate Owned" by the bank. There is no longer a homeowner or buyer (temporarily). It is a controlled asset or a "non-performing asset" (NPA) held by the bank and the bank is losing every day it is holding it in their possession.

Ladies and gentlemen, ALL banks are NOT in the business of being a property manager and / or playing the game "monopoly". They are holding some of these properties, but eventually NEED to get rid of them and that is where most of you with the ability to purchase come in.

There are some incredible opportunities in this arena, but be sure you work with a highly skilled, knowledgeable, trained realtor. Unless you have tremendous pockets and a powerful legal team.

So, what is a short-sale? It is simply the prior step to a REO where a homeowner is still in possession and needs to sell their property 'SHORT' to the bank. The homeowner usually owes more than the property is actually worth. Here in San Diego, California there are a TON of these and other parts of the country as well.

As a buyer, if you are patient and persistent, there may be some great deals out there that pay off if you have the fortitude to wait, but the bank has to still approve ALL terms and conditions in your purchase contract (offering). You may wait up to 3 months or more, but eventually you will have an answer.

As a seller, (disclaimer: CHECK YOUR CPA, ACCOUNTANT, LEGAL COUNSELLOR, etc.) there are certain consequences that may or may not affect you. Simply "walking away" could come back and haunt you for years as far as tax liabilities, deficiency judgements, etc. Seek help before "throwing in the towel". From what I've seen and had the opportunity to help my clients, a short-sale is way better than a foreclosure! You may be able to salvage credit and buy again sooner than if you had a foreclosure.

Thanks again for reading and freely share especially to those that are looking for answers.

Visit http://www.JoeMendoza.com