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There is a difference in a foreclosed property and a bank owned property (REO). What is the difference between a foreclosure and an REO (Bank or Lending Company Owned) or a short sale?
Most people consider an REO the same as a foreclosure, however, although they are similar, there are subtle differences in the two. An REO is actually a property that is the result of a failed foreclosure. What that means is that the bank or Loan company that held the loan for that property foreclosed on it and it failed to sell at auction. You can find a list of properties that will be auctioned off in your local newspaper.
The term short sale refers to a property that is in foreclosure but is sold prior to auction for an amount less than what is owed to the lender.
In a foreclosure, a bank or Loan Company reposes a property due to the Owner’s inability to make payments on their loan . Once a loan holder misses enough payments to constitute foreclosure, the bank will notify the loan holder and begin foreclosure proceedings. At this point, the bank or Loan Company has the legal right to sell the property, regardless of the property still being occupied by the owner or any tenants.