If you’re looking for a bargain and considering purchasing a foreclosure, you’ll first have to decide what kind of foreclosed property to pursue.
The three categories are:
- Sherriff’s Auction
- Repossession (or a bank-owned REO)
Pre-foreclosures are in the process, but have yet to be auctioned. Your offer will have to be negotiated with the lender as well as the owner, which makes the deal complicated and slow.
Prices also tend to be highest in this category of foreclosures.
The lowest prices are found on properties that are being auctioned, but inspections are usually unavailable for these homes, and the transaction can get very sticky. These foreclosures are often best left to contractors, investors and developers who are well versed in the challenges these properties present.
Finally, if the home does not sell at auction, it is repossessed by the bank and offered as an REO (Real Estate Owned by the bank). These may list at a higher price than the auction price, but you may have the home inspected and avoid any repair surprises, not to mention the fact that you have clear title to the property.
However, homes in this stage are usually still offered in “as is” condition, so make sure to pay very close attention to the inspection report and as always, consult with your agent before making any offers.