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    Successful Short Sales: Acronyms You Need to Know

    Posted Wednesday, January 8, 2014

    House Keys with Real Estate Tag on WhiteKnowledge is power. That’s true whether you’re running a Fortune 500 Company or investing in short sales. 

    To increase your level of knowledge and success when investing in short sales, here are the definitions and important information for four acronyms:

    BPO: This stands for Broker Price Opinion

    A BPO is, essentially, the same thing as an appraisal. In a short sale transaction, the lender hires a broker to appraise a home. The broker assesses the house both inside and out to determine its current market value.

    If a BPO has not been ordered by the lender or if you cannot find out what the value of that BPO is, you may be at a big disadvantage when trying to submit a short sale package.

    The closer your short sale offer is to the BPO, the better chance you have of the short sale transaction going through.

    NOD: This stands for Notice of Default

    This is the first official stage in the foreclosure process. The lender has a right to file the Notice of Default after the very first late payment, but the NOD is not usually filed until 60 to 90 days after a late or missed mortgage payment.

    In some states, the Notice of Default is also attached to the home, generally on the front window, like a big scarlet letter. It states that the borrower is in default, behind in the mortgage payments, and if the payments are not paid up, the lender will seize the home.

    This is a crucial step in purchasing a short sale, because if the lender has not issued an NOD, they won’t consider your short sale offer.

    NOT: This stands for Notice of Trustee’s sale

    The NOT is a recorded notice that a trustee’s sale has been scheduled.  That means the clock has really started ticking! If all late payments, fees, and penalties aren’t paid up, the property will be auctioned off to the highest bidder. The minimum amount is usually whatever the lender needs to pay off the first loan and other fees.

    The buyer who wins the auction gets the property as-is. This includes all liens, whether or not the lien has been recorded. Title insurance is generally not available for up to two years. This can be a significant risk for a buyer.

    Many properties don’t sell at auction so they go to the lender and become REOs or Bank Owned Properties…

    REO: This stands for Real Estate Owned by the lender

    An REO, also known as a Bank Owned Property, is a property that goes back to the lender after an unsuccessful foreclosure auction. So when you hear the term REO, it means that the lender now owns the home.

    Usually, the lender asks a real estate agent to list the property for sale. The initial listing price is often high. Hire a real estate agent who is knowledgeable about short sales to negotiate the price for you and help you navigate the complicated short sale process through to a successful closing.

    If you’re interested in investing in real estate or short sales, I can help. Give me a call today.


    Broker Price Opinion


    Notice of Default


    Real Estate Owned

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