The difference between an REO (bank owned property) and a short sale are as follows:
1. REO has already been foreclosed on and is owned by the bank and they are ready to sell!
2. My advice to you is to offer more than what the bank is asking only due to previous experience and current experience. Most REO properties get many offers and the banks will accept the highest and best offer.
A short sale on the other hand is:
1. Being sold short of what is owed on the mortage to pay it off. And, it can take 5-6 months (sometimes sooner) to get an answer from the bank as to if they will accept the short pay off. Sometimes they will, sometimes they won't.
2. The listing agent must be experienced in short sales, otherwise, it will be a nightmare. They must know what to submit and how to follow up without being annoying to the negotiators. There is a fine line. I have experienced it many times!
3.. It takes a lot longer than an REO so if you are in a hurry to move into something, bank owned would be the way to go! If you have time to wait, then you can get deals with the short sales.
You still can do an inspection on the properties. The one nice thing about the short sales is typically the people are still in the house and did not leave mad. Sometime the REO's the people are mad and you just don't know all that they have done to the property unless you hire a great inspector!
Joan Patterson, B.A., A.S.P., G.R.I., Realtor
Keller Williams Realty
8250 White Oak Avenue, Ste 102
Rancho Cucamonga, CA 91730