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Description of Situation |
Seller's Realtor's Role (Listing) |
Buyer's Agent's Role (Selling) |
Your (the buyer's) Needs |
| Short Sale (Pre-Foreclosure) |
The owner of the property is in default, however, he still has some control of it, but the proceeds from the sale will not cover the debt that's secured by the property. The owner is the seller, but the contract will be "subject to lien-holder's approval." |
A successful short-sale listing agent can make a killing these days. Part of her job is the same as always: expose a properly priced property to the widest public. Her additional specialties are a) convincing sellers in distress that she's the on who can get it under contract before the bank takes the home, and b) that she can negotiate with the bank to accept a lower payoff. A short sale is typically listed on realtor.com and the local MLS. |
A buyer's agent in a short sale situation helps the buyer understand the geographically specific process. He should advise to expect lots of delay at every step and a huge amount of time needed to get a deal closed, to make a good-faith (near best) offer right from the start, and to keep looking. He should be friendly and cooperative with the listing agent. |
Your agent should have been in a successful short-sale --don't feel shy about asking for a couple of phone numbers of buyers who she helped. She should help you understand that you will not get ridiculously low offers accepted by banks. She should help you approach a reasonable offer price and help you to keep looking as many short sale attempts fail due to the bank taking the house after all. |
| Auction (Foreclosure) |
At a courthouse step auction, the owner loses control of the property. Either the first-in-line creditor (the bank) or a higher bidder gets ownership. Payment in cash is required by the end of the same business day--no mortgage financing will work on acquisition. |
At auction, there is no listing agent involved. Properties do not show up on realtor.com or the local MLS. |
At auction, there is no buyer's agent involved. A proxy may bid for you in your absence, but someone's got to pay in cash the same day. There are no inspections, and you may have to evict whoever is living at the property. |
Some agents might "bird-dog" auction leads for you for a fee or other consideration. However, you'll have to buy a property "blind", with no inspections or other due diligence. Unlikely. |
| REO (Post-Foreclosure) |
Real Estate Owned are properties that the bank acquired through foreclosure (repossession) of collateral after the default of the borrower. The bank is now the owner and typically tries to liquidate this liability to recover lost principal. |
Agents who specialize in listing REO property have never seen so much work. They don't care about values, they care about volume, and they are neither nice nor easy to work with, and they have little patience for a retail buyer.
REO properties are typically listed on realtor.com and the local MLS, however, they are often sold to a speculator before the public gets a chance. |
A buyer's agent should know the listing agents and who or who isn't a straight-shooter. He should be familiar with the REO process because that, too, is cumbersome and not pleasant for the buyer. |
Getting a really juicy REO property requires both you and your agent to be on top of new listings, with many properties going out individually by email before the MLS shows them. Offers need to be made immediately, and they also shouldn't be too low. Like with short sales, inexperience shows through too-low offer prices and unrealistic expectations. Seller's direction as to terms should be followed to the "t." |
35 Counties Accounted for Half of the Nation's Foreclosure Actions (USAToday)