Foreclosure is not pretty.
I do not exaggerate when I say that at LEAST once a day, someone will ask me a question about foreclosures. Foreclosure terminology can be a bit intimidating, but it’s easy to learn. Here are some common terms and what they mean:
BPO- Broker Price Opinion. Banks hire real estate agents, appraisers, and inspectors to visit a property and give an opinion of what the house would sell for on the market right then. WIth a lot of banks being across the country it gives them an idea of what’s going on locally and helps them make informed decisions. They will usually get more than one to make sure it’s right.
Short Sale- This is when the owner of the house owes more than the market value of the house and must sell. There are several reasons they might have to sell at a loss, perhaps they aren’t able to afford the payments anymore. Sometimes they have been relocated out of the area. If they owe $250,000 and the housing market will only support $225,000, the bank has to approve the sale, and agrees to be paid back less than they are owed. They will usually have a BPO (or two, or three) done to make sure the Short Sale Price is not too low. The process of buying a short sale can take anywhere from a few weeks to several months, and patience is the name of the game.
REO/Bank Owned Property: After a house is foreclosed on by the bank, they will list it with a Real Estate Agent who specializes in Listing REO or Bank Owned Homes. They will send a guy out to winterize the property, get a BPO (or two, or three), and tell the agent how much to list it for. Buying a foreclosed property is easier than buying a short sale (in this Realtors opinion).
So there. Basic foreclosure vocabulary. For more info about buying foreclosures in general, check out the TNT’s front page story from last week.
