There are a lot of 'catch phrases' that are being slung around in the media today.  Before you can consider selling your home as a short sale or purchasing a foreclosure, you might need to know what they are... or first, what the difference is between them.

Pre-foreclosure - Before a home is 'foreclosed upon', or even before a home is officially in the 'foreclosure' process, the Seller is deemed to be in pre-foreclosure.  They may only be one or two payments behind on their mortgage.  They may even be further along in missed payments.  Regardless, they have not yet been served, and neither the court nor sale date has been set.  In either case, the home is usually referred to as a pre-foreclosure, because it is BEFORE the actual foreclosure proceedings take place.  *As a side note, please know that the foreclosure process varies from state-to-state.  We are located in North Carolina, and thus when we speak of the foreclosures, we are speaking of the non-judicial process.

Foreclosure - Many people use the term 'foreclosure' as a general, catch-all word for distressed properties.  However, it is a little more specific than that, because as we just read, an owner may be behind on their payments, and they may be facing the possibility of foreclosure, but they may not have yet been served.  However, once the seller is served (receives notice of the default and is apprised of a court date to determine if a sale may be set) then the home may be more specifically referred to as a 'foreclosure'.  The problem with this term is that most people refer to homes owned by banks as foreclosures.  Now, read on...

REO - An REO is a short term for Real Estate Owned.  This is the term that I prefer to use when referring to what most people call foreclosures.  Typically, when a property is sold on the courthouse steps, if an investor does not purchase it, then it is almost always purchased back by the bank or lender.  When this is the case, it becomes part of the lending institution's inventory - and as such, it is called an REO.  It was a foreclosure, but it is now an REO.  And that is the difference.

Short Sales - Short Sales are becoming more and more popular, as more and more home sellers are in financial distress and find that their homes are not worth as much as they owe. So, let's spend a little more time and go into greater detail on short sales. Click below to REALLY get into short sales.

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