Selling foreclosed homes is a job best left to professionals. There are many intricacies with the law in regard to selling foreclosed home, especially in states that require banks to sue negligent owners to take control of the properties. When it comes to selling foreclosed properties to the public, however, there are many ways banks who have come into possession of these properties tackle the issues.
When a property goes into a foreclosure auction, it is the final step before the bank seizes control. In a foreclosure auction, the minimum bid of the home is the amount outstanding on the loan, attorney’s fees, interest accrued and any additional costs created by the foreclosure process.
In the current marketplace, most homes go to auction without any bids simply because most suffering the loss of their home owe far more than the home is worth in today’s marketplace. If the home is purchased at auction, you must have a cashier’s check in hand for your bid price and be ready to take the home “as is” including any current occupants.
REO Homes and Sales
Once the home is unsuccessful at auction, it is taken back by the bank and becomes a REO, or Real Estate Owned, home. These REO properties are the ones most commonly referred to as foreclosures in the marketplace. The bank-owned REO properties are usually handled by a branch of the bank specializing in the proceedings.
Once the bank owns the property, the original mortgage no longer exists. The bank then steps in to do an eviction if necessary and it might make some repairs to the property as well. The bank also handles negotiations with the IRS to forgive any tax liens and pay off any delinquent homeowner’s association dues. When it’s all said and done, the property is free and clear to be sold again with the bank taking the loss.
Listing REO Homes in the Real Estate Market
Once the bank has prepared the property for sale, it is given along with many others usually to a selling agent experienced with REO homes. These agents often handle large bulks of these listings stretching their own resources thin at times. The properties are sold through MLS listings usually, but can be listed in other resources as well. The selling agents merely facilitate the sale for the bank, they do not represent the buyer.
If you want to buy one of the bank-owned properties for sale, you must secure your own agent. It can be challenging to work with sales agents for REO homes. You can expect long waits and many levels of approval. Phone calls won’t be returned and offers may not even be acknowledged. But if you are able to tap into the REO market, you can buy properties for far less than you might imagine, even with the additional hassles of foreclosures.
Spend time planning ahead with your agent to create an offer too good for banks to resist before you find a property you’re interested in. Remember, the banks have already lost money on the foreclosed property – they certainly don’t want to lose any more than they have to. A lowball offer will likely be ignored, so consult with your realtor to find a reasonable price close to the listing price on the homes.