Successful Short Sales in Charlotte: 4 Acronyms You Need to Know
Knowledge is power. That’s true whether you’re running a Fortune 500 Company or involved in a short sale in Charlotte NC. Whether you’re the buyer or a seller, working with short sales or any distressed properties can be a bit of a challenge. We’re here to help minimize the stress involved in the short sale process.
To increase your level of knowledge and success when working with short sales in Charlotte, here are the definitions and important information for four acronyms:
BPO: This stands for Broker Price Opinion
A BPO is, essentially, the same thing as an appraisal. In a short sale transaction, the lender hires a broker to appraise a home. The broker assesses the house both inside and out to determine its current market value.
If a BPO has not been ordered by the lender or if you cannot find out the ultimate value of that BPO, you may be at a big disadvantage when trying to submit a short sale Offer. If you’re working with a short sale listing agent who has experience in processing short sales, they will let you know that the list price IS the value of the BPO and you will need to submit your Offer to reflect that price.
NOD: This stands for Notice of Default
This is the first official stage in the foreclosure process. The lender has a right to file the Notice of Default after the very first late payment. However, the NOD is not usually filed until 60 – 90 days after a late or missed mortgage payment.
In some states, the Notice of Default is also attached to the home, generally on the front window, like a big scarlet letter. It states that the borrower is in default, behind in the mortgage payments, and if the payments are not paid up, the lender will seize the home.
This is a crucial step in purchasing a short sale, because if the lender has not issued an NOD, they may not consider your short sale offer.
NOT: This stands for Notice of Trustee’s sale
The NOT is a recorded notice that a trustee’s sale has been scheduled. That means the clock has really started ticking! If all late payments, fees, and penalties aren’t paid up, the property will be auctioned off to the highest bidder. The minimum amount is usually whatever the lender needs to pay off the first loan and other fees.
The buyer who wins the auction gets the property as-is. This includes all liens, whether or not the lien has been recorded. Title insurance is generally not available for up to two years. **This can be a significant risk for a buyer.
Many properties don’t sell at auction so they go to the lender and become REOs or Bank Owned Properties…
REO: This stands for Real Estate Owned (by the lender)
An REO, also known as a Bank Owned Property, is a property that goes back to the lender after an unsuccessful foreclosure auction. So when you hear the term REO, it means that the lender now owns the home.
The lender will ask a real estate agent to list the property for sale. In our area, the initial listing price is often high. **Be sure to hire your OWN real estate agent who is knowledgeable about distressed properties and the area to negotiate the price for you and help you navigate the process through to a successful closing.
If you’re interested in investing in real estate or short sales in Charlotte, I can help. Give me a call today at (704) 491-3310 or email me at Debe@DebeMaxwell.com for more information.
