Foreclosure property sales are done via an auction process. A foreclosure auction sale begins with a minimum bid that includes the loan balance, any accrued interest, plus attorney's fees and any costs associated with the foreclosure process. To bid at a foreclosure auction, you must have a cashier's check in your hand for the full amount of your bid. If you are the successful bidder, you receive the property in "as is" condition, which may include someone still residing in the property. There may also be other liens against the property. Since what is owed to the mortgage holder is almost always more than what the property is worth, very few foreclosure auctions result in a successful sale. Then the property "reverts" to the bank. It becomes an REO, or "real estate owned, REO or bank-owned property.
Bank Owned Properties:
Are properties that have already gone through the foreclosure process without a successful bid at the court house and are now owned solely by the lender or other mortgage holder. The bank will handle the eviction of any people living in the property, if necessary, they and may or may not do any repairs. This is done through a company that specializes in getting listings from the Lender. The Lenders most generally want to sell the property "as is" condition although that may be negotiable in some cases. The bank will also negotiate with the appropriate authorities to remove any tax liens and pay off any homeowner's association fees that are due. Florida Statue makes any Lender to provide a clear title to the new buyer. This is the many reasons why the Lenders usually pay for closing fees such as Title Insurance. As the buyer of a bank-owned property, the buyer will receive a title insurance policy and the opportunity to investigate the property. In today’s market, the banks put the unit on the market to sell it not to keep in the Multiple Listing services for months. This is one of the reasons why the REO’s don’t stay on the market more than a week.
Short Sales Properties:
Are those that are still legally owned by the homeowner but the property is being listed for sale at a price that is less than the amount owed on the mortgage. Since both the seller and the mortgage holder are involved, once the seller accepts an offer, it must be submitted to the mortgage holder (Bank), who will frequently attempt to get a higher price before the deal can be accepted by the investors. This process involves a tedious negotiation with the mortgage holder to release the property. A property offered as a short sale may or may not already be in the foreclosure process. Short sale properties are generally sold "as is" with no warranties. However, in a short sale, you will have time to inspect the unit or to find a loan for the property. The buyer may do any inspections they wish at their own expense but it is unlikely that the bank will agree to cover the cost of any deficiencies found during the inspection.
If the bank believes it can receive a higher price by taking the property through the foreclosure process, they will hold out for a higher price closer to the property's market value. Lenders accept short sales only when the price of the home is real close to its market value.
The assistance of a professional Sky Avenue Realtor knowledgeable in the purchase of "distressed properties" will make buying a home as a short sale, at a foreclosure auction or as a bank-owned property a much simpler, although surely not a trivial process.