So many Port Charlotte and North Port customers come to me and are confused about what is the difference between a short sale and REO or Real Estate Owned (Foreclosure).  It seems that if the bank is involved with the decision in both cases, many buyers feel they are the same and shy away from looking at them for potential purchases.

Real Estate Owned- a term that has been around for a long time (back in my other life in banking) means just that- the bank now owns the property through foreclosure.  The bank wants to sell these quickly and efficiently as they are costly to maintain; therefore all of the larger banks list the properties with REALTORS across the country- and the same applies here in Charlotte County.  The process is very simple, the bank may require certain addendums to the contract and a particular closing agent. Normally there is an answer on the offer within 48 to 72 hours and in the case of a cash offer can close in as little as 2 weeks.  Often the property is offered to owner occupants only for a period of time before allowing investors to make an offer on the property.  Government foreclosures or  HUD homes (I am a HUD Broker) use a bid process where all bids are turned in by a certain date, reviewed and the best bid accepted. You agent is notified the next or same day if your bid is the winning one.  Normal closing time on a HUD property is 30 to 45 days.  Port Charlotte, North Port and Punta Gorda have a steady stream of HUD homes at this time.

Short Sales- this is where the homeowner has a hardship and cannot continue to afford the home AND the property current value is less than the mortgage payoff on the property.  The homeowner/seller starts a dialogue with their lending institution to apply for short sale authorization.  In every case the bank will insist that the property be placed on the market with a REALTOR.   When an offer comes in that is acceptable to the seller, with guidance from the REALTOR, the offer is accepted by the seller and a pending, binding contract for sale is created.  The offer along with supporting documentation is submitted by the REALTOR and seller to the lender. The lender reviews the information and orders an appraisal to determine if : 1- the seller truly has a situation of hardship and 2- if the offer is in line with current market value.   Time for this process can be lengthy- the average now at 90 days; however the federal government has stepped in and as of April 1st the process is to be streamlined.

I personally have a 100% close ratio on short sale listings-  with no price negotiation.  This is due to several factors.  Gaining and continuing to monitor short sale information to be an expert in the knowledge needed to facilitate a sale. Organization in the process.  Last, but most important, pricing realistically and only accepting offers that will fall in line with market value when the bank reviews the package.

One final concern seems to be condition of the properties.  For sellers there is an incentive on both short sales to keep the property in good condition- the banks will pay a cash dividend to sellers who maintain the property because it is so much less than they would pay to have to handle maintenance.  Buyers are often surprised to see foreclosure or short sale properties in pristine condition,  but there are many that are clean, refreshed with new paint and in great condition.

Tags: foreclosure, Luxury Homes, North Port Short Sales, Port Charlotte Foreclosures, port charlotte HUD homes, port charlotte short sales, Punta Gorda Foreclosures, real estate owned, REO, short sale

Posted on Sunday, February 28th, 2010 at 2:14 pm and is filed under Foreclosures, Real Estate, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.