Answer: We are sometimes asked how REO sale closings differ from the typical buyer-seller transaction. REO sales are truly a different type of closing transaction, and sometimes the differences can cause some delays in the process.

For starters, REO sales often encounter title clearing issues because they occur on the tail of a foreclosure. Sometimes problems inherited from the previous owner, who was not paying the mortgage, taxes or HOA dues, can remain on the title. Anything that needs to be paid through the closing, such as surviving tax, special assessment, HOA and judgment liens, must be approved by the selling entity. Unlike a typical buyer-seller transaction, the seller must view and approve the full HUD. In a traditional market residential real estate transaction, the seller and buyer do not see each other's HUDs.

Deeds can take time to be approved and signed by the seller. In a traditional market residential real estate transaction, deeds are quickly approved and signed, often in a day. Finally, in an REO sale, selling banks may need extra time to review even the simplest addendum to the contract, adding to the timeline as well.