"SOL" Homes: Virginia MLS Foreclosures, REO, Short Sales Defined + Email Alerts

Newspapers are filled with talk of the flood of foreclosures, but none that I have seen have taken a step back and defined all the different industry words for my new industry word: “SOL” (S* Out of Luck) Homes ™, and how to buy them. 2-3% of MLS listed homes are SOL in Northern Virginia. Can your agent find them?

It might seem odd that I’m writing about how to buy foreclosures listed on the MLS since some might have just finished reading my article Attn. Market Timers! The EXACT Best Day to Buy!

Well SOL homes can get you a 5-15% discount* if you

  1. Know how to search for them, AND
  2. You have patience
  3. You aren’t picky!
  4. Fully understand the risks of buying “as is”

* Side shout: BusinessWeek did a great job in their article This Old Foreclosure Buying directly from a bank avoids some risks, but don’t expect a steal They both dispelled the 30-50% pennies on the dollar mentality people equate with foreclosures and how foreclosures of a year ago are different today, they no longer occur mainly on courthouse steps. They use the MLS)

So, let’s go over the SOL terms:

  • Pre-Foreclosure: term used by agents or sellers that are in the process of being taken to the courthouse steps since they have defaulted on their mortgage (didn’t pay it). They want to sell the property before it gets foreclosed on, and oftentimes before it is taken over by the bank. Banks sell them on the MLS through Realtors (learn how to find these later in the article). Here are some examples of Fairfax Pre-foreclosures on the MLS.

  • Foreclosure: Technically a foreclosure is a house that is being auctioned off at the courthouse steps. Many people use this word incorrectly to represent a house that is in Pre-foreclosure, or has already been foreclosed on and taken over by the bank (see REO).
    Traditional foreclosures aren’t occurring on the courthouse steps as much (see BusinessWeek Art) since the amount owed (the starting price for the auction) is TOO HIGH. So when the minimum price is too high on the courthouse steps, the banks take them over and sell them on the MLS through Realtors. (learn how to find these later in the article) Here are some examples of Arlington Foreclosures on the MLS and don’t forget Realtors that can’t spell and leave off the E in “forEclosure”: Virginia Forclosures

  • Short-Sale: Usually an MLS listed house that is heading toward foreclosure. The deal requires 3rd Party Approval (the bank) because the seller is trying to sell for BELOW the loan amount and is hoping that the bank will approve the deal, and eat the loss. Only about 5-15% actually get to closing since banks oftentimes say, “no” (blog post coming soon, so sign up). For example, a $500k home was bought with 100% financing. If the market price is now $450k, a seller can a) bring a $50k check b) try a short-sale c) let the bank foreclose. With a short-sale, the bank eats the $50k. Note that the seller still gets a taxable 1099 for the difference (at least for now). This process is seen as being better for the seller’s credit vs bankruptcy and foreclosure. The benefit sometimes to the bank is lower foreclosure costs and re-marketing hassles.

    Examples of “Short Sales” in Alexandria on the MLS. Note that some listings say “not a short sale,” they will come up in an MLS keyword search.

  • REO- Stands for “Real Estate Owned”, but it really means Bank Owned. I guess buying a B.O. house wasn’t too appealing. These are homes that were already “foreclosed” on. Nobody bought them on the courthouse steps and the bank took it over and is attempting to sell them, usually (but not always) for a discounted price.

    Examples of REO Bank Owned in Virginia on the MLS

  • Bank Owned (same as REO)
  • Third Party Approval- If you see this in a listing, it is probably a Short-Sale and it is warning the agent that some extra paperwork and time will be required.
  • Auctions, “Buyer’s Premium”: Some auctions require a 2-10% “premium” be paid on top of the winning bid. So if you bid $500k, you have to pay $550,000. In my opinion, it is a marketing trick that auction houses use to trick sellers by saying “you pay nothing, the buyer pays our commission.” Just make sure you do the math, your NET is what matters.

    Examples of listings with the word auctions in them: Virginia Auctions on the MLS

  • Auctions, “Reserve price.” Sometimes this is also a marketing trick. I have seen $700k listed houses have a $690k reserve. They get people at the auction all excited to get a deal. The auction ends and they say, “sorry you didn’t meet the ‘reserve price’, here, how about a counter?” Sounds like a trick to find out who might be remotely interested in the property.
  • Auctions, “No Reserve.” If you are an Ebayer, you know what this means. The product will be sold, no matter HOW low it goes. If you see “No reserve,” it MIGHT be what I call a REAL AUCTION (send it to me, I’d love to see it)

Auction disclaimer: I am not an expert when it comes to Auctions. I still have yet to see ONE “real auction” in Northern Virginia. I think they don’t exist, but I can be proved wrong if you’d like (have at me in the comments section).

Dealing with SOL property are a PAIN. Expect counters to sometimes take several days, and sometimes months!

And an SOL home is NOT necessarily a better deal. Somebody might have paid $500k for it with 100% financing and the list price might be $480k as they feel the waters. I saw one short sale in my building that started at $600k (they paid $590k). It was overpriced, so it sat. Then the seller/bank got serious. They did a drastic drop to $530k. It sold for full
(while I had 4 people come to me wanting to offer $480k, and they missed out). This was 1 of 2 best priced units in the building over the last 2 years. Another short-sale came on and was sold in 4 days, so if you want these, be ready to act FAST.

So how many of these are there EXACTLY on the MLS?!

Homes that are SOL can be found by having your agent search the Realtor Remarks for keywords, or try it yourself on the new keyword based FranklyMLS.com: REO, foreclosure, bank, pre-foreclosure, foreclosed, forclosure*, short sale, auction, third party, 3rd party. *9% of the time this word is misspelled!

In Arlington:

Update to article: I thought I’d run some data from Woodbridge. To my amazement 35% were SOL! This blows my mind!

In Woodbridge

  • Today there are 273 MLS homes from $300k-$325k. 97 (35%) are SOL!

MORE DATA ON 6 NOVA AREAS: 48% of MLS homes are SOL (Foreclosure etc) in Herndon ($300k-400k)

This is shocking!

If you do plan to buy, you need a good agent to know when to spot a “better deal” (remember I don’t believe in “good deals” until you sell your place. See “Buyer’s Market?” No Such Thing As a “Good Deal”)


Have your agent sign you up for alerts based on your price range, area AND these SOL keywords in the Realtor Remarks (different than the Public Remarks). If your agent can’t do it, have them email me, I’ll show them how. If you don’t have an agent… (sorry I tried to hold off as long as possible) welcome to FranklyRealty.com . I’ll set it up for you.

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-Written by Frank Borges LL0SA Virginia Broker FranklyRealty.com

Ps. Please send typos and corrections. Disclaimer: Data gathered from MRIS’s MLS database. Distressed homes

  • 11
  • September
  • 2007

26 Responses to “"SOL" Homes: Virginia MLS Foreclosures, REO, Short Sales Defined + Email Alerts”

  1. Tchaka Owen says:

    Nice BO pic! One thing I want to add to the PITA aspect of a short-sale is that since lenders are overwhelmed right now, it’s taking 45-60 days to do one. Very long time to wait!

  2. Indianapolis Real Estate | Paula Henry says:

    There really are not that many deals! The public just thinks it is so.

  3. Lisa David says:

    I like that Frank tells it like it is. I try to explain to my clients that these properties aren’t always as good as they seem. In fact, most of these properties are bought “as is” (Frank forgot to mention that :-). I find myself browsing through hundreds of listings for so many of clients because they think they are going to get a phenomenal deal from a foreclosure or an REO. You can make a lot of money in times like these…but we sure work extra hard for it!!

    Lisa David

  4. Barry Shapiro says:

    In Camarillo, CA there are currently over 50 Short Sale listings, out of apx. 560 total homes for sale. I expect this number to double and possibly triple by the end of the year. The most difficult job in handling a Short Sale listing is to go from “S O L” to “S O L D” before the buyer backs out… Thanks for the thorough post, Frank.

  5. Missy Caulk- Ann Arbor Real Estate says:

    Frank, excellent breakdown, we don’t use that word SOL in our MLS, we have to search from them in the remarks, where the listing agent says Bank Owned, it is harder to find them and set up searches, I wish we could do it as I get many requests. Congratulations on the feature, if it wasn’t already there, I would have recommended it.

  6. Frank says:

    Hey Missy,

    I just made up the term SOL. I wish it was as easy as just searching for one term. I have to search for all of them.

    love it! From SOL to SOLD~!

  7. Cindy Jones Fairfax County Real Estate says:

    Frank, I also have saved searches by certain brokers and agents who specialize in “SOL” properties. Still haven’t found the “great” deal but it is going to be up to the banks to figure out a bottom line. Nice information!

  8. Rebecca Savitski Broker/Owner NC List For Less Realty Inc says:

    This is one of my daily searches. Great post

  9. Stella Barbou says:

    Great post.
    Just to add to this, I am also a residential agent but I also work at a law firm (which we do a lot of bankruptcy work, especially now). When I am putting someone in a rental, if the rental sounds too good to be true, like a $800K house for $2000 per month, then research should be done on when the home was purchased, (If 2005-2006 then check to see if for sale also and whether or not 3rd party is in the remarks) because there are people accepting the security deposit and first months rent and after renter moves in, home is being foreclosed. The homeowner now has $4000 to help them get by another month while they are losing their home. I am in Loudoun County, Virginia and I am seeing this happen more and more. I have people asking me what to do legally if they are the new tenant and there really is nothing because who ever is losing their home will be filing bankruptcy most likely the tenant has no recourse.

  10. Paul Moye, Broker, ABR, GRI, e-PRO says:

    Great info, are you in any of the REO groups in AR

  11. Lori Gilmore - Will County Illinios Realtor says:

    Great post Frank — Many Realtors who work REO’s in my area don’t always spell it out or use the agent remarks field so I also search the public remarks field for the following terms. . .corporate, proof of funds, no survey, no termite, addendums. . . I’m able to find alot of properties that we might not have found by sticking to the obvious terms!

  12. Dean Crandall says:

    Great post Frank! I’ve performed searches for clients over the past five plus years I’ve been in RE and I search a few additional terms. Consider searching for these ones as well: (our MLS allows for wild card searches so foreclosure is searched as “*fore” (no quotes)) bank, 10.2 (warranty of condition), forclosure (for misspellings), foreclosure, short sale, REO, as is, as-is, TLC, third, 3rd, party, and letter.

    Each of these terms imply that there are financial issues going on or which have gone on… Sometimes, I’ll get a “party” house included, but those homes are usually overpriced and aren’t considered by buyers.

    My list of “distressed” properties is sent out to lookers and clients who are looking for deals. Often times buyers looking for a “good deal” end up buying a non-distressed (non-SOL) home when they’re looking for themselves.

    I’m new to ‘rain and I’ll keep checking back!

    Dean Crandall
    KW Westfield
    Highland, UT

  13. Roy Kotz says:

    I have a couple investers that I consistently search for the SOL home. Even though there are more of them on the market, at least in the Omaha area, it seems that most owners still are not realistic with the pricing, and when one is you may have a day to contact your buyer and get a contract in before it is sold.

  14. Lisa David says:

    I also have a few investors that are constantly looking for SOL’s that aren’t realistic about the price. They always want to offer an amount significantly under the asking price. I end up doing tons of work and then the listing goes under contract with another realtor.

  15. Tracy Thrower Conyers - Online Marketing Solutions That Work! says:

    Excellent post, Frank! You really described this timely topic in excellent layman terms.

    A note for Missy and other agents — double check to make sure that your MLS hasn’t added a searchable field for these properties. I was speaking to a client yesterday who belongs to one of the larger MLS’s here in SoCal and he pointed out that there is a field called “legal” that I don’t think was there until recently (I’m not an active agent, but I remember talking to other clients in that area before on that topic). MLS fields are not set in stone. It’s just data and things can be changed. Ask for it. Times change and it’s your data. Make your MLS help you do your job.

  16. Katie Evans says:

    BO might be a good term….with all the sweat equity that has to go into it!

  17. Anonymous says:

    Your SOL blog post rocked.

  18. Rebeccalev says:

    Thank you for this eye-opening post. It is great to read a real estate piece written truly to the consumer. So many posts just assume the buying public knows all these terms and nuances. I can attest, “We don’t”.

    Thanks again.

    Rebecca D. Levinson- http://www.connect2agent.com

  19. James says:

    You know it is very interesting that there is all this talk about increase in defults and forecousures, but I agree, they don’t seem to be any higher than in the past few years.

    The falling prices on wallstreet are real, but some companies being dragged down have such little exposure, just like the economy as a whole! This seems more like a self fulfilling prophecy!



  20. FRANK LL0SA Va Broker- BLOG.FranklyRealty.com says:

    So I’ve done more reading on:

    WOW! The horror stories that I have read. Including:
    1) Banks taking 60 days to respond to and offer
    2) Banks changing their mind days before a closing because they make MORE money if it forecloses (insurance reasons)

    If you want these steals of deals, expect the MAJOR headaches that come with it. These banks don’t have the staff to handle their problems, so they go weeks without replying and their voicemails are FULL!

    Read that blog group and read the comments if you want to get a REAL-TIME idea of what is going on.

  21. Vicki Lloyd says:

    Great post Frank! I’ll link to it from my blog.

    I did many REOs back in the mid 90s, and they were all challenging, to say the least.

    I try to avoid short sales, as so many agents don’t have a clue about how to do them. I had one short sale offer finally get accepted 6 months after submitting it! By then, the buyers had bought another house.

    I think the lenders will get better at their response times, and more realistic with their pricing as more and more hit their books. It should be very interesting to see how it all plays out in the next few years!

  22. Danilo Bogdanovic says:

    The MLS makes it nearly impossible to find “SOL” properties and they don’t tell you how to do it. I had to dig around through the search fields to find the correct ones to select (such as “bank addendum required”). It would be nice if the MRIS made it easier and helped us out a bit by telling us how to do it in the first place.

    Btw…Ashburn went from 5% of the inventory being foreclosures about 6 months ago to 14% just the other day. The rest of Loudoun County is right around the same percentage. I thought that was rough until I saw Herndon’s numbers…ouch!

  23. Harriet says:


    I search through gobs of these for my “Nova Bubble Fallout” blog (disclaimer — I’m not a Realtor&reg :-). Besides the obvious SOL keywords “lender, third party approval” etc., look for the word opportunity. (If I see that word one more time I might scream).

  24. Anonymous says:

    Excellent blog and I have been following for sometime. With that said, I would like your thoughts on Parkside@ Alexandria Condominium. I have been eager to sell since I bought 2.5 years ago. The one bedroom Madison seems to be the favorite which I have rented (1080 sqft 1b 1b patio home)-What are your thoughts? It has been in my best interest to sell for sometime, but like most I have waiting.


  25. […] For more on definitions about different types of Foreclosed homes or SOL homes. […]

  26. anonymous says:

    Hey Frank,

    nice article. I am new to your website. Want to know why do
    banks insert the foll clause in their addendum during contract

    “if the original buyer comes back and pays off the mortgage then
    he can claim the house being foreclosed upon.” or something to
    that effect.


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