A short sale is the first step to avoid foreclosure. A short sale will occur when a lender agrees to take less than what is owed on the property. In most cases, the owner is already in default or has stopped making payments of their loan. Purchasing a short sale does not in any way mean you will have a “short sale.”In fact, short sales can take from one month to a year to get authorization from the bank and close escrow. They require a lot of patience, but can end up being a very good deal.
Generally speaking, a short sale will not affect your credit as negatively as a foreclosure.
An REO is a Real Estate Owned property. This is a property that was a foreclosure not purchased at an auction or a Trustee sale.
A foreclosure is when the owner has stopped making payments for a period of time and the bank takes possession of the home. This has a very negative effect on your credit and can affect your credit score for many years to come.
Last modified: December 11, 2017