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3 STAGES OF FORECLOSURE
In this stage, the buyer purchases the property using a Realtor. The homeowner has their home listed usually as a short sale. The time frame for this short sale purchase is usually longer due to the forms that need to be provided as well as the number of loans that are on a property. Once the loan is approved, the bank provides the approval in writing and closing may take place quickly.
Homes that are in default are auctioned off by the county at their courthouse. Bidders can’t inspect the property prior to purchase and titles are not provided so that you would know if there are any liens on the property for unpaid taxes, etc. You need to order and inspect the title ahead of any bidding. Buyers need to come up with about 10% to 20% in cash at the time their bid is accepted and need to bring the remainder in a few days. There are lots of pitfalls in this type of purchase. You need the advice of an experienced attorney.
REO (Real Estate Owned), Bank Owned Foreclosed Homes
The REO property is purchased with a Realtor and the home is listed. The home is sold in “AS IS WHERE IS” condition with a home inspection that is recommended. A title is provided, liens are paid, and closing costs are prorated to the date of closing as with normal residential real estate closings. If you are purchasing a condo, the HOA may bill for the unpaid payments 6 months prior to foreclosure date. The home may also be purchased using a Realtor at an auction. The bank holds auctions with experienced auction companies.