Many people don't have a lot of information when it comes to terms like foreclosures, sheriff's sales, short sale or even a bank owned home. A bank owned home is probably the least understood term. If a home owner fails to make their mortgage payments in a timely manner the home can be foreclosed on which means the bank or lender can repossess the property.
Once the property is repossessed it is sold at a sheriff's sale, which is a public auction, to the highest bidder. A borrower can also contact the lender and make arrangements for a short sale, which is when the borrower accepts less than the amount owed on the property. In certain instances the borrower will be responsible for the remaining balance after a short sale, but most lenders don't pursue the balance owed.<p>Which brings me to what is called a bank owned home or real estate owned, (REO). If a home goes to foreclosure, as previously mentioned it will be sold to the highest bidder. The least amount that can be bid is usually enough to cover the mortgage balance any interest that has accumulated all attorney fees as well as any other costs.
There are many situations when no one bids on foreclosed properties. If this happens the home is turned over to the bank which means it is a bank owned home. Any mortgage on the property is wiped out. The bank will now attempt to sell the property using some conventional methods, for as much as they can get. The bank will be responsible for any tax liens that may be on the property. As owners of the property the bank must now handle any evictions that need to be done. <p>Banks will begin to accept offers and they may counter your offer. It's always a good idea to inspect the property to see if there is extensive damage. Banks will try to sell homes as is and they may not want to provide financing when this is the case. <p>The state of the economy has caused bank owned homes to increase at a rate not seen in past times.
There are some dire consequences as a result. The property values of homes in the neighborhood which have not been foreclosed on begin to decline at a steady pace. Empty homes which are not well kept have a tendency to quickly bring down property values when they are vandalized.
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Mel
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