How do Short Sales & Bank Owned Sales Work?

How Short Sales Work:

In a short sale scenario, the home owner still holds title to the property. In a short sale, the home owner has more than likely defaulted on their mortgage loan. If everything goes correctly, the lender agrees to a pay off the amount that is less than what the home owner owes on the property.  In order for the home owner’s lender to consider a short sale, the home owner needs to provide a series of documents to their lender. (This documentation is something that cannot be controlled by the buyer, causing many of these transactions to go sour.) As potential home buyers submit their offers, the home owner still has to sign off on the home buyers’ offers. However, the final decision on what the home sells for and which offer is accepted is left to the lender.

Many lenders are overwhelmed and understaffed, Many of these offers on a short sale home can sit at the lender’s Loss Mitigation Department for 2-3 months before even reviewed. In many cases, home buyers get tired of waiting for the lender’s reply and withdraw their offer. In such cases when the lender comes back with an answer, the next qualified home buyer’s offer is studied. If the next home buyer has withdrawn their offer the lender looks at the next qualified home buyer’s offer, Thus still not guaranteeing a sale as the lender has to approve the final price. The home seller is still partially involved in the sale of their property, so when escrow procedures start the home owners are required to release all necessary disclosures to the home buyer. The timeline from start to finish on a short sale can be as quick as 60 days if already bank approved, and as long as 1 year plus.

How Bank Owned Sales Work:

The term REO Homes (Real Estate Owned) is another way of saying Bank Owned Homes. In a bank owned sale the lender is the institute that is selling the home. The lender acquires the home usually after the whole foreclosure process is complete, or after the home owner gives their lender title to the property in order to stop the foreclosure process.

Once the lender takes ownership of the property they hire a Real Estate firm to sell the property. The lender owns the home and most likely has never seen the home. The individuals who resided in the home are long gone. This means the home buyer will NOT receive any disclosures about the property (Form17-disclosure on any improvements, past problems, or defects.) Since the lender owns the home, the time period to wait for an answer from the lender is much shorter than a short sale.  Usually lenders get back to the home buyers within a week after an offer is submitted.

In Bellevue, bank owned/REO condos/townhomes that are kept reasonably well maintained tend to sell relatively quickly and even receive multiple offers. It is common for a bank owned home to sell above the lender’s asking price, as the lenders normally bring the properties on at under market value. Most banks are looking to off load the property as quickly as possible as these homes have already been written off as a loss.

Call us we’re here to help you navigate this process and direct you to the best deals available
be that short sale, bank owned, or nondistressed.

Cherie Lang 206-391-2021

Luke Dunckley 206-255-0280