房产交易的全频谱介绍

some people here still have questions about foreclosure, REO, ..., I would like to introduce those concepts based on my own experience.

a property, say a home, can be sold regularly, either (1) through a realtor agency or (2) sale by owner. Obviously, sale by owner should give both seller and buyer more benefits, but a little bit higher risk. From this simple illustration, you should understand that bigger profit always goes with bigger risk.

I will use branching this logic concept to introduce the whole spectrum.

(a) Anytime, you (assume you are the home owner) have 2 options: pay your mortgage and taxes; or don\'t pay them.

(b) If you always pay your mortgage and taxes, you can sale the property either (1) through a realtor agency or (2) sale by owner.

(c) If you don\'t pay your mortgage or taxes, now here are several milestones: if mortgage payment is 30 days late, then the property becomes (3) distressed home.

(d) Then the property becomes the distressed, you have 2 options: pay again plus penalties; or still don\'t pay anything.

(e) If you back to track to pay regularly, you return to (a)

(f) if you still not pay, then your lender or tax collector will send you a formal notice to initialize the foreclosure process. From this time to the foreclosure sale, is called pre-foreclosure by generalized definition.

(g) in the meantime, you can negotiate with the lender to start short sale

(h) if short sale succeeds, then the property is transferred.

(i) if short sale fails, there is another chance for investors to transfer the property right before foreclosure, I would like to call it specialized pre-foreclosure sale.

(j) if property still fails in pre-foreclosure, then it\'s time for the foreclosure. This is the most risky transfer, but could also be the most profitable one.

(k) if the property fails in foreclosure, then the lender has it back,

(l) after lender wins the bid in the auction, actually it may not be counted as a win. Then investors can also buy it from the bank, I would like to call it after foreclosure.

(m) since the foreclosure is involuntary alienation, therefore there is typically but not necessary a redemption period for the owner. So the property could go back to the original owner

(n) if it fails in redemption, there could be a need to go to prothonotary court to fight other lien holders and face more involuntary auctions.

(o) if still fails, then it becomes the REO, or called bank owned. It will be back to the public market for most people grab.

(p) if it fails, then the bank will have a voluntary auction to sell the property immediately, please keep in mind, banks (actually its shareholders) cannot tolerate the REO as a failure in their balance sheet very long.

(q) if it still fails to sell in the bank’s auction, the bank could just give it up, without paying the tax anymore, then it’s back to tax sale

(r) if it fails again in tax sale which means none wants to pay the must paid tax to get the property, then your home finally becomes government’s property.

Overall, foreclosure is like a lion catching a zebra, it’s good because a live zebra tastes fresh, but lion is also takes risk. REO is like hyena waiting for lions’ leftovers. Hyena eats zebra’s corpse, which may not taste fresh, but hyena doesn’t risk much.