St. Louis Short Sale & REO Condos
We've all heard the terms "Short Sale" and "REO" mentioned in real estate circles these days. It's a sad fact that many St. Louis condo and loft owners have found that the value of their home has declined far below the amount they currently owe on it. If they can afford the payments and can wait until the value comes back they'll be able to ride out this cycle. However, if they are forced to sell during this time they risk a short sale or REO.
What is a Short Sale Condo?
Sometimes, to avoid a foreclosure, banks will let owners sell their condo for less than they owe. The bank takes the proceeds of the sale and allows title of the property to transfer to the buyer. The seller is usually not off the hook though, as the bank will still hold them liable for the difference. The bank has the final say about whether or not they will accept an offer on the property; the seller cannot make that decision. That's why you'll often see verbiage like "Short sale - subject to lender approval" in the property description. These closings can take a while, but if buyers are patient they can purchase these condos for a fair price.
What is an REO condo?
REO, or Real Estate Owned, Condos are properties that have been foreclosed and are now in the possession of the lender. These condos are listed with Realtors and marketed just like any other property. Anyone can make an offer, but you need to have your own funds or financing lined up. Don't assume that because a bank is selling the condo that they're willing to finance it for you. When you are negotiating to buy an REO condo, you and your agent will be submitting offers to the bank for approval. The nice thing about buying an REO condo is that there is no emotion involved - the bank has a number they need to recover in order to sell and if you come close to it you'll probably go to contract.