Foreclosure / Bank Owned Property
What’s the difference?
“Foreclosure” is the process the mortgagee (bank) uses to take ownership of the property after the mortgagor (owner) has stopped making payments. The process takes months and starts with “default” notices to the owner. The process ends with an auction. The bank will usually win the bidding by paying what is owed on the property. The bank will then “take the property back” into their real estate owned (REO) department, evaluate it for sale and put it on the market. Once back on the open market, these properties are often referred to as “foreclosures” or “bank owned”.
What are some of the issues involved?
- The properties are often in severe states of disrepair.
- Banks as owners will respond usually within days but don’l allow changes to their documents.
- Home inspections can be challenging as the properties are sometimes “dry” - no water or power.
- Pricing is often good enough to encourage multiple offers and bidding wars.
