Foreclosure Terms & Definitions


REO stands for owned by the bank after it has gone to auction without any third-party buyers. REO is an accounting term that the bank uses to indicate a non-liquid asset. The foreclosing lender can then put the REO up for sale or rent on the local market with a licensed real estate professional.

The Madison Group eXp has been managing and selling REO properties for over 16 years with thousands of these complicated transactions completed. We can help buyers interested in our current listings and our office exclusives that are not yet available to the general public.


If a borrower cannot repay the amount owed, the lender can put the home up for auction with the County Sheriff for purchase at a minimum acceptable amount. The winning bidder must pay a cash down payment at the time of auction, and the remaining balance is due shortly thereafter. The deed is then transferred to the winning bidder without a guaranteed clear title.

Madison Group eXp has a dedicated team member research property, attend auction events, and place bids in person, and we can assist any investor that is looking for an expert partner in this process.

Short Sale

If a home is worth less than what is owed or a borrower falls behind on their payments, sometimes the best financial decision is to negotiate a sale with the lender for less than the debt obligation (aka selling "short"). The sale of the home stops the foreclosure process and can help the borrower's credit. The seller in a short sale is still the borrower, although the bank will need to agree to the sale if the purchase price is less than what is owed.  One of the most important parts of negotiating a sale with the bank is making sure the borrower does not pay out-of-pocket for professional fees.

If a short sale fails, the bank can move forward with repossession, sometimes by offering the home at public auction.

When an owner is six or more months behind paying the lender, the lender files a Lis Pendens, which is a formal notice of legal action. It is the first start of the foreclosure process.

If an owner is struggling to pay the Mortgagee, foreclosure proceedings can be avoided with a deed-in-lieu, which conveys all interest of the mortgaged home to the lender.

Selling a home while under financial stress is an exhausting process and having an experienced professional help you through it is imperative. The Madison Group has a specialized short sale team that can help you hit the ground running on an already time-sensitive process.

We do the right thing, and we can start by scheduling a brief call or in-person visit to offer some free advice.

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