What is a Distressed Property. A distressed property is one that is for sale because the Borrower/Seller is experiencing a financial hardship. Or, it could refer to a property taken back by the lender in foreclosure and is now offered for sale as an REO property.
What is a Short Sale?
A short sale happens when 4 factors align:
- The Borrower/Seller sells their home
- The net proceeds of the sale are insufficient to pay off the mortgage liens
- The seller is unable to bring funds to closing (financial hardship)
- All lien holders agree to accept less that what is owed them
What is an REO?
REO stands for Real Estate Owned. In other words, bank owned property. If a short sale is not successful a property will go into foreclosure. If the foreclosure sale is unsuccessful the bank ends up with the property. REO properties are then offered for sale by the bank through a real estate agent.
