There’s a whole other “Lingo” or language when it comes to Real Estate Foreclosure properties. Knowing this language can really help decode this foreclosure market. Here’s a list of Foreclosure Real Estate Terms Decoded to help you pick up the “Lingo”. If you come across any more, feel free to email me McKinney.Kathy@gmail.com.
AOS – “Agreement of Sale” – Documents you sign to make an offer on a property.
AS IS – “AS IS” – Seller will make no repairs for the buyer. Bank foreclosed properties are all sold in “AS IS” condition.
Bank Approval Needed – “Short Sale” – The bank holding the mortgage must approve the sale at less then what is owed on the mortgage.
Bank Owned – “REO” – Bank foreclosed through the sheriff sale and now owns the property.
BPO – “Broker Price Opinion” – Real estate broker gives their opinion of value of the property.
Buyer Walked – “Short Sale Too Long” – Buyer gave up waiting for bank approval of the Short Sale.
Certified Funds – “Bank Check for Deposit Funds” – Bank’s require deposit money presented with the offer in Bank Check or Certified Check only and will not accept Personal Checks.
Contingent on Recording of Sheriff’s Deed – “Sheriff Releases the Property” – After the sheriff sale the sheriff’s department checks all was completed properly and issues the Deed of ownership to the bank.
De-Winterization – “Utilities Turned Back On” – Bank properties are Winterized to protect the pipes throughout the property. Banks can require up to $250 from the Buyer to have the utilities restarted for home inspection or mortgage appraisal.
Deed-in-Lieu – “Owner Gave it to the Bank” – Owner signed over the Deed to the property to the bank holding the mortgage instead of going through the foreclosure and sheriff sale.
Distressed Property – “Needs Work” - Refers to the property condition, usually needs considerable work.
DOM – “Days on Market” – Number of days the property has been on the market for sale.
Foreclosed Property – “Bank Sheriff Sale Completed” – Bank or mortgage company filed mortgage foreclosure and sheriff sold the property. Back to the bank or third party buyer at the sheriff sale.
HUD – “US Department of Housing & Urban Development” – FHA mortgages that defaulted and were insured by HUD. HUD pays off the bank who foreclosed and now owns the property to sell.
HUD 1 – “Closing Statement Signed at Settlement” – Official Federal Reporting Form used to detail all charges for both Buyer and Seller when purchasing a property. Prepared by the title company.
LBP – “Lead Based Paint” – Properties built prior to 1978 paint used may contain lead. Lead is a poison and can cause serious health issues.
No SDS – “No Sellers Disclosure” – Banks are not responsible to complete a Sellers Disclosure on properties they obtained through foreclosure.
Owner Occupied – “Buyer will Live There” – Owner will live there as their primary residence. Banks usually give preference to owner occupied buyers on foreclosures prior to considering an investor.
Non-Owner Occupied – “Investor Purchase” – Investor buying to rent or resell the property and does not intend to live in it.
Pre-Approved Mortgage – “Letter from Mortgage Lender” – Banks will not accept an offer without proof the Buyer is qualified to purchase the property including credit and asset verification.
Presentation of Offers – “Bank’s Our Way or No Way” – Procedure and documents needed to present a bank foreclosure offer.
Proof of Funds – “Show the Bank the Money” – Bank or investment statement or line of credit being used to purchase a property on cash purchases.
REO – “Real Estate Owned” – Bank or Mortgage company owns the property.
Short Sale – “Bank Takes Less Then Owed” – Owner is asking the bank to take less then what is owed on the mortgage to sell the property.
Short Sale Active with Contract – “Have an Offer and Wants a Backup” – An agreement to purchase is in front of the bank awaiting approval and they are looking for a second buyer as a backup.
Sweat Equity – “Your Hard Work” – Increase in the value of the property due to your hard work making improvements.
Title Insurance – “Cover your Purchase Insurance” – Title insurance covers you as the Buyer against all claims, mortgages, liens, unpaid bills, etc. filed against any prior owners.
TLC – “Tender Loving Care” – Refers to the property condition usually needs some work.
Transfer Tax – “State & County Charges” – Tax due to transfer ownership of a property. In Montgomery County 2% usually each side pays 1%. On bank foreclosures, the bank usually will refuse to pay transfer tax and the buyer is responsible for all 2%.
U&O – “Use & Occupancy Certificate” – Some townships require an inspection to meet standard building codes prior to allowing occupancy. Banks will not perform U&O inspections or pay for any requirements needed.
Underwater – “Owes More than it’s Worth” – Balance of the mortgage is more than the property can be sold for compared to similar properties recently sold.
Hope This Helps
Kathleen McKinney, Realtor - REO Specialist
Platinum First Realty, 708 Main St, Harleysville, PA 19438
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