Sometimes talking with a Realtor can be like a conversation with your doctor. The shift in the housing market has resulted in a new language; one that leaves many people either saying, “Huh?” or scrambling for a dictionary.
For example, REO is a term we’re starting to hear more of. And no, it has nothing to do with REO Speedwagon.
So what is it? Well, REO is an acronym for “Real Estate Owned”. This a label for a property that has gone through a sheriff’s sale without receiving a bid for more than the loan amount. Most of these properties do not sell because there is more owed on them than their fair market value. The previous owner was unable to redeem, or pay off, the loan in the six month period that following the auction, and the bank has taken title and control of the property.
We often hear these properties referred to as foreclosures. In actuality, foreclosure is the legal proceeding during which the lender gets a court ordered termination of the property owner’s (mortgagor’s) legal right of redemption.
Semantics, I know. But if you hear the term REO, it’s safe to assume the bank is in control.