What does short sale mean on a listing?

It means the owner owes the bank more than the house is worth, so the bank has to agree to take less than it is owed. The owner cannot say yes on their own. Waiting months for an answer is normal, and the answer can be no.

How long does a foreclosure take in New York?

New York is a judicial foreclosure state, so every foreclosure goes through a court, and the state requires the lender and the owner to attend settlement conferences first. One to two years from the first missed payment is ordinary and longer cases are common.

What does REO or Real Estate Owned mean?

Nobody bid enough at the auction, so the lender took the house back and now owns it. The lender is the seller. Answers come faster than a short sale, but the house is almost always sold as is and the seller knows little about its history.

Is buying a foreclosure cheaper?

Sometimes, and the discount is rarely free. These homes are usually sold as is, may have deferred repairs, and can carry long waits or cash only terms. Price the repairs and the wait before deciding whether the discount is real.

Buying on Long Island · the words on the listing

The listing says short sale. What does that mean for me?

Some listings carry a note about the seller's situation. Short sale. In foreclosure. Bank owned. Probate. The words sound scary, and most of them are not. But each one changes two things you care about: who has to say yes to your offer, and how long you will wait for the answer. Here is all of it in plain words.

On this page: the one question that matters · normal speed · someone else must say yes · a company owns it · how this works in New York · what to do before you offer

The one question that matters

In a normal sale, one person decides: the owner. You make an offer. They say yes or no. You know in a day or two.

These listings are different. On some of them, a bank has to say yes. On others, a judge does. Those people do not care that you found your dream house. They are looking at a file.

So when you see one of these words, ask two things. Who has to approve this? And how long do they take? Every note below answers both.

Normal speed

The owner still decides. You will hear back fast.

NoneNothing special here. This is a regular sale. The owner says yes or no, and you move at the normal pace.

Probate listingThe owner died and the estate is selling the house. A court may have to sign the papers. That can add a few weeks. The person selling often never lived there, so they may know very little about the house itself. Inspect carefully.

Someone else must say yes

This is the slow group. Plan on months, not days, and know that the answer can still be no.

Short saleThe owner owes the bank more than the house is worth. So the bank has to agree to take less money than it is owed. The owner cannot decide this alone. You can wait months for an answer. The bank can say no. It can also come back and ask you for more money.

Notice of defaultThe bank sent the owner a letter saying they are behind on payments. Nothing has gone to court yet. The owner still owns the house and can still sell it the normal way, as long as the price covers what they owe. If it does not, it becomes a short sale.

In foreclosureThe bank has taken the owner to court. The owner still owns the house today. If the price covers the loan, this can move at a normal pace. If it does not, the bank has to approve, and you are in short sale territory.

Third party approvalSomeone who does not live in the house has to say yes. Usually that is a bank. Sometimes it is a judge. This is a warning label about the timeline.

Bankruptcy propertyThe owner is in bankruptcy court. A judge has to approve the sale. There may be a hearing date, and dates can move. Your attorney will want to read the court file before you get attached.

Contract vendeeThis one is unusual, so read it twice. Someone already has the house under contract, and they are selling you their spot in that deal. You are not buying the house from the owner. You are buying that person's contract. Have your attorney look at this before you offer anything.

A company owns it now

Answers come faster here. The trade is that the seller knows almost nothing about the house, and you buy it as it stands.

Real estate owned, sometimes written REONobody paid enough at the auction, so the bank took the house back. The bank is the seller now. You get answers faster than a short sale. But the house is sold as is, nobody can tell you what broke last winter, and the bank will not fix things for you.

HUD ownedThe federal government ended up with the house after a government backed loan went bad. HUD sells these its own way, with its own forms, its own website and its own deadlines. For a period after listing, people who plan to live in the home get to bid before investors do. You need an agent who is registered to place the bid for you.

AuctionThe house sells at a set date and time to the highest bidder. Often you must pay cash. Often you cannot get inside first. Sometimes you are bidding on a house you have only seen from the street.

Auction terms of saleThese are the rules for that auction: how big a deposit you must bring, when the rest is due, and what fees you pay on top. Read them before you raise your hand, because they are not the same at every auction.

How a foreclosure works here in New York

This part surprises people who learned about foreclosures on the internet, because most of what you read online is about other states.

New York uses courts. A bank here cannot just take a house back. It has to sue, in court, in front of a judge. The state also makes the bank and the owner sit down together first and try to work something out. Those meetings take months on their own.

So the whole thing is slow. One to two years from the first missed payment is ordinary here, and plenty of cases run longer than that.

What that means for you is simple. A house that is early in this process may not be for sale for a long time. And the word foreclosure on a listing does not tell you how close it is to the end. Somebody has to look it up.

What to do before you offer

Ask who has to approve it, and get it in writing. The listing agent knows. If the answer is a bank or a judge, you now know to expect a wait.

Ask how long they have already been waiting. A short sale that has been in front of the bank for four months is a very different deal from one filed last week.

Get your own attorney early. In New York your attorney reads the court papers and the contract before your money is at risk. On these sales that is not a formality, it is the whole protection.

Inspect anyway. As is means the seller will not fix things. It does not mean you should skip looking. On Long Island that means the tank sweep and the cesspool camera too, the same as any other house.

Price the repairs and the wait, then decide. A discount is only a discount after you subtract the new roof and the six months you spent waiting. Sometimes the number still works. Sometimes it does not, and walking away is the win.

If you are looking at one of these right now, send me the address. I will find out which situation it actually is, who has to approve it, and how long it has been sitting. That call is free and it takes me a few minutes.

This page explains what the words on a listing mean. It is not legal advice, and foreclosure is a legal process. Your attorney answers the legal questions, and on these sales you want them involved early. Mohammed "Muds" Mudassir is a licensed real estate salesperson with OverSouth Real Estate, St James NY.

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