Foreclosure & REO are the same. The bank already foreclosed & now owns the property. Acceptance of an offer to purchase is quicker than with a short sale.
Auction= trustee sale most of the time. The property gets sold at court. This is not for the average person because you could be stuck with liens on the property which will become your responsibility.
Sara Mehrpouyan, CDPE
Specializing in Foreclosure & Short Sale
in answer to your question,....
in order,....of progression
Pre foreclosure Owner owns the house and wants to sell during short sale
Auction Owner is losing the house to the bank being sold on courthouse steps ( for cash only - cashiers check )
Foreclosure and REO is the same thing. The bank has taken back the house and is selling it as bank owned, foreclosed, or REO,
I like to use the analogy of water in a stream.
The best water is upstream.
Pre foreclosure - Short Sales - you have first shot at the house here
This is where you can buy the house with a cooperative seller using financing and get details about the house. You may also help to save a family from financial ruin and get a great deal The house is usually in better shape no holes in the walls or vandalism or retaliation against the bank by destruction of property.
Currently the wait time on short sales is an extra 30 days usually, and maybe 45 - 60 days if there is PMI or a second lender. The time frame for approval has shortened quite a bit lately.
If you have cash and want to try at a courthouse step auction you can but you have to have money in the bank ready to hand out a cashiers check by 4pm. Keep in mind many times the lender just takes the property back.
The bank took the house back. the bank owns it. The house is vacant. and the bank has no knowledge of the house. You are kind of buying blind on the banks terms. The contracts are usually one sided. If you back out you will probably lose your deposit. Some times you will be issued a warranty deed instead of a grant deed, having a weaker title. Sometimes you will have issues with squatters, vandalism by sellers or trespassers and banks prefer cash buyers here over financing.
Harold Sharpe - Broker
So Cal Homes Realty
California Department of Real Estate License # 01312992
please see my blog regarding pre-foreclsoure deals.
Short sales can be great for finding deals, you however need time and patience as they can be lengthy if not negotiated properly. The key is finding the ones where the banks have already stated what they will or will not take for a pricew, perhaps one that someone else walked away form leaving the quick opportunity to buy for you.
Please see my blog regarding how to buy a short sale
Auctions are one of the toughest if you are not experienced, you will need cash to purchase and need to do your homework, you become resposnible for evicting any occupants or paying off any liens , 2nd motgages or back taxes.
The best buy is a bank owned house, the bank buys it back at foreclsoure auction, evicts the occupant and cleans the house up. They appraise it and put it on the makret below market value.
Please see my blog for tips and advice on buying bank owned house
Licensed Associate Broker
Accredited Buyer Representative
GREEN Designated Agent
William Raveis Legends Realty Group
Start with a foreclosure. Since you are "jumping in" you can get assistance and representation from a professional Real Estate Agent. You can then jump into other vehicles of purchase in time.
Good luck. I am an experienced Short Sale Listing and Buyer's Agent rendering service throughout southern Cal. Happy New Year! Shirley Bell 323 309 5230 Keller Williams Realty
I know I answered this question for you before. As a VA buyer, you probably won't buy AT the auctions, because you would need a Cashier check to pay for a property in full.
If you would let me refer you to an experienced short sale agent & you have some patience to, the short sale is your next best option. REO properties get a lot of bids & being a VA buyer doesn't put you in a good position as the bank will likely take an all cash offer or a conventional loan offer w/ 10-20% down before yours.
For agents out there that want to disagree with me, I have analyzed a 150 sales in one large city to see how many sales were accepted & closed to an FHA buyer & the result was about 3-5%. meaning 90-95% were sold to Cash or Conventional loan buyers.
I have a good plan for you to land a property, please email me directly & I can give you more details.
Pre-foreclosure: Lots of opportunities. Short sales are just one possibility. Advantages: Possibly purchasing at a substantial discount. Other potential buyers may not be interested (because of the long time short sales can take) or may drop out along the way. Disadvantages: Uncertainty of short-sale process and possible extended time for lender approval. However, there are plenty of pre-foreclosures that aren't (yet) short sales, and might never be. It's entirely possible for someone with equity in their property to fall behind on payments. In fact, it happens a lot. In that case, a bank's approval isn't required. You must move in, buy the house (making up arrearages), and the house is yours. Example: House is worth $300,000. It was Bought 15 years ago for $200,000, and mortgage is paid down to $150,000. Owner loses his job and falls behind on the mortgage. Let's say he's $8,000 behind, and it'll take another $5,000 for penalties and interest. That means it'd cost you $163,000 to buy the house, plus any extra for the owner. So you offer the owner $180,000. The owner gets $17,000 in cash and stops the damage to his credit. You get a house worth $300,000 for $180,000. Dan--the first answer--is correct that, logically, it'd make more sense for the homeowner to sell conventionally if there's equity in the property. But sometimes the owner just wants a quick resolution. Or sometimes, with the foreclosure just weeks away before the homeowner decides to act, there isn't time for a conventional sale.
Foreclosure/REO: They're the same. Typically, the process is a lot cleaner than a short sale. And there are some good deals with foreclosures, too. However, many foreclosures aren't in the greatest condition. The previous owners have had plenty of time to trash the house before being kicked out, and many of them have done just that. You're buying the house in as-is condition.
Auction: Only for professionals.
Based on your question'--"Preferably would want to buy before all the above happens"--look for pre-foreclosures that aren't short sales.
Hope that helps.