Information on Foreclosed Homes Owned by the Bank
According to the Everything RE website, a foreclosed home passes back into the care of a bank or other mortgage provider when a homeowner cannot make mortgage payments, and a buyer cannot be found for the home during a foreclosure auction.
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REO
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The Real Estate ABC website explains that properties that pass back into the care of a financial institution are known as real estate owned (REO) properties. Each bank usually has a department within their organization responsible for administering REO properties.
Foreclosure
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Homes that pass into foreclosure are subject to a foreclosure auction, where the starting bid takes into account all the costs incurred by a bank and the balance of the loan. Real Estate ABC explains that the majority of foreclosure auctions do not result in a sale because the cost of the opening bid is higher than the value of the home, meaning the bank then takes control of the property.
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Condition
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A bank-owned property is usually sold for a lower price than houses in the same area; however, the property is sold in "as is" condition. According to Real Estate ABC, banks usually negotiate the removal of all liens on the property before the home is sold.
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