![]() Many banks have their own REO offices, and it's these offices handle the sale of bank-owned properties. It simply means that the ownership of the house has defaulted to the bank that backed the original loan. REO is a typical listing you'll see when looking at foreclosed homes for sale. Bank Owned Properties are also called Real Estate Owned (REO) properties. With an auction, you'll need to have at least enough money to pay the down payment, though some auctions will allow negotiations on rates if you've been pre-approved for a home loan. Law enforcement officials typically conduct these auctions, and the notifications for the auctions can be found in local newspapers and online. The vendor approves the auction to get their money back as soon as possible. Once the house is officially foreclosed, it can be sold at auction. While you may get the house at a much lower rate than a traditional purchase, the sale itself must be reviewed by the bank that backed the original loan and may take weeks or months to get approved. When this is the case, lenders want to try to sell the property quickly to recoup at least some of the money owed on the mortgage and agree to "sell the property short" by accepting an offer that is less than what the house is worth. ![]() This can be for several reasons like the number of repairs it needs, the drop in home value in the properties surrounding it, or the state of the real estate market. A short sale happens when the property is worth less than the outstanding balance of the mortgage. It's important to note that during this period, the homeowner can try to sell it to get the debt off of their shoulders and prevent the negative impact a foreclosure would have on their credit history and ability to get loans in the future. If the owner cannot catch up on their payments during this time, the house will be foreclosed. Typically, in this stage, the lender has notified the homeowner that they are behind in payments and given a period in which they can catch up. ![]() A pre-foreclosure is a sale that happens prior to the home being officially foreclosed. Unlike conventional home buying, there are actually several steps to selling a foreclosed home, each with its own set of rules and ways of payment. If the home was purchased with a home loan through a non-government lender, then the home becomes property of the bank behind the financing.Įither way, several steps go into foreclosing a home and several ways one can be sold. ![]() If the home has been purchased with an FHA loan, the house is foreclosed, and ownership goes back to the Department of Housing and Urban Development (HUD). What is a Foreclosed Home?Ī foreclosed home is a home that has been removed from the owner's possession because they have not been able to keep up with the payments on the house. Because of the stigma around foreclosed homes, many buyers don't know how to buy a foreclosed home or its benefits. Buying a foreclosed home is now becoming more of a financially viable option for many people looking to buy their next (or first!) home. ![]()
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