This is a very common question I am asked at nearly every open house. To answer the question very simply, a short sale is owned by private owners who owe the bank more than their house is worth on the open market and a bank owned property or REO (Real Estate Owned…By Lender) is owned directly by the bank. Now what does this all mean to the buyer? In general, a short sale involves much more waiting and is affected by more variables. First of all, the short sale departments of these banks and lenders are very busy right now and unfortunately are having trouble keeping up with their rising work load. They also still must deal with owners on record who may live in the home, may still be paying a payment, and in most cases aren’t happy that they are losing their home. On the flip side, a bank owned property is vacant and directly owned by the bank. Being that the bank does not want to be responsible for the property while it’s vacant, they will usually price the home more aggressively. The bank will also usually respond to an offer within 5 business days, while short sale response can and in most cases take months.
–Mac
