Short Sale & REO

A short sale happens when a homeowner sells for less than what's still owed on the mortgage, which means the seller's lender has to agree to accept less than full payoff before the sale can close. An REO, or real estate owned, transaction is different: the property already belongs to the bank after a completed foreclosure, and the bank is selling it directly rather than through a homeowner.

Both situations layer extra approval steps on top of a standard purchase. In a short sale, escrow has to work around the seller's lender's timeline for reviewing and approving the sale price and terms, which can shift the closing date more than once before everyone's ready to sign. In an REO, the seller is a financial institution instead of an individual, which usually means more standardized paperwork but less flexibility on things like repairs or timing.

What doesn't change is the core of what escrow does: hold the funds, track the contingencies, and make sure the closing documents reflect what all parties, including the lender when one is involved, actually agreed to. We've handled enough of both to know where these transactions tend to stall, and we stay on top of the approval chain instead of just waiting for the next update to arrive.