DISTRESSED PROPERTY DEFINITION
Lender mediated properties are otherwise known as short sales or properties that have been foreclosed upon. In the peak of the real estate crisis, lender mediated properties accounted for nearly 30% of all real estate transactions. In some Minnesota communities, lender mediated properties accounted for nearly 70% of all real estate sold. Toward the end of 2014, the National Association of Realtor expects these property sales to account for less that 10% of homes sold. With that being said, short sale and foreclosure properties will always be present in the market place. Therefore, a savvy buyer looking for a good equity position should be aware of how to properly pursue a lender mediated property if one comes available.
Definition of a Short Sale:
A short sale property simply means the property is being sold for less than the amount owed on the mortgage. During the housing downturn, short sales usually coincided with missed payments and foreclosure activity. While that is common, it does not have to be the case. Divorce or relocation can cause a short sale to be necessary if the property is over leveraged or simply does not have enough equity to pay standard selling fees.
Definition of a REO property:
REO is an acronym for Real Estate Owned. It means Real Estate Owned by a mortgage company or lender. These properties have usually gone through the foreclosure process or deed-in-leiu process and the lender has repossessed the home. Lender owned properties mean the bank, or some other lending institution, has the property in their REO Department and is trying to liquidate that asset in order to recoup some of the money lost on the mortgage in default.