Foreclosures

A foreclosure is the process by which an owner’s right to a property is terminated, typically due to default. The property is usually sold and the proceeds applied to the debt. There are numerous outlets lenders use to resell the properties, but the most common are auctions and real estate agents.

AUCTIONS

Auctions are popular because individuals can bid on specific properties and lenders can unload multiple properties quickly. With this in mind, many people think they can uncover a great “deal.” With the internet, there is an abundance of information on real estate, values, assessment, and inspection. HOWEVER, this information is worthless without the ability to interpret the data. Have a real estate professional by your side throughout the home buying process even when going to auctions. Auctions are fast-paced, high pressure arenas and most individuals are not experienced enough with the process and the information to minimize any risks involved.

REO

REO PropertyReal Estate Owned or REO are lender owned properties listed on the MLS. They are sold by real estate agents. As such, the transactions are not much different from a typical purchase where the seller is not a bank. The most common differences are:

  1. No Concessions – The chances of getting repair costs and closing costs covered by the lender are usually low as the lender is trying to recoup as much money as possible for the property
  2. Strict Timeline – The lender usually wants the transaction to close as soon as possible, minimizing their losses. There are sometimes per diem charges for going over the specified escrow time. This is one reason REOs are listed on the lower range of property listings.
  3. Poor Condition – From normal maintenance to major repairs, the lender usually does not do anything to better the condition of the property. Occasionally the agent will water the grass and paint the house, but there is minimal upkeep to the property. In addition, many former owners destroy and vandalize properties before moving out, contributing to the poor condition of the property.