Based on current trends in our client searches on our websites as well as the massive success of, it seems pretty obvious that one of the main things buyers are searching for is foreclosed or distressed properties. If you are one of those people (and if you found this article, you are) searching for foreclosed properties in Northwest Arkansas, here’s 4 Terms that will be invaluable in your quest to get a good deal…

Corporate Addendums…
You’ll often see these two words on a listing sheet somewhere. This means the property is owned by some form of corporate entity whether it be a bank, fannie mae, hud, or some other corporation. These two words should me a couple of things to you…

  • It’s probably a Good deal. Yes, most properties that are listed and owned by a corporation tend to be under market value. I said MOST. Be careful.
  • It’s probably going to be a hassle. Just prepare yourself for this eventuality and it won’t stress you out nearly as much. Corporations like to use their own documents, their own timetable, and their own way of doing things. This leads us to our next term…

Those three letters stand for Real Estate Owned and to a buyer, they basically mean the same thing as Corporate Addendums. REO’s are not foreclosures even though people use the terms interchangeably. An REO can only exist after a home has been foreclosed on and taken back by the bank. REO properties are generally priced at or below market value. If you have a good Realtor keeping an eye on new listings that pop up you can snag the great deals as soon as they hit the table.

A foreclosure, more specifically, a foreclosure sale, is when a bank attempts to sell a property to cover the outstanding balance on the mortgage plus expenses and attorney fees. Most properties that are foreclosed on are worth less than the note that is on the property (under water), so foreclosure sales are generally less successful than a typical REO sale. Investors tend toward foreclosure sales because they will usually allow the previous owners to become the new renters, thereby getting a good start in cash flow for the rental property.

This is the term used when someone owes more on the property than it could currently be sold for on the open market. This happens when people take out high loan/value ratio loans on properties, then values fall, resulting in more being owned on a property than it’s worth.

There was a recent study done that showed (as of the end of June 2009) that 24% of owner-occupied homes had mortgage debt that exceeded their value according to

There are many other terms and things to understand about Foreclosures, REOs, and other forms of distressed properties. This article barely scratches the surface.

If you are a serious buyer and want a great 60 page e-book all about buying foreclosures… Give us your email address below and we’ll give you a free copy. Thanks for reading.