Process Buying Foreclosure REO

If the attempted Short Sale of an owner is not successful, the property will go into foreclosure. As the bank has their foot in the door with the usually pretty big amount of the mortgage they are almost always the ones to get  it in the end. As soon as the property is conveyed to the bank they can themselves sell it as they like.

The bank takes care of liens and other claims and  will evict any tenants if they have to. They will also prepare the issuance of a title insurance so the next buyer is protected.

The purchase of a foreclosure mostly is trouble-free and can usually be accomplished in a reasonable timeframe (within 4 weeks). The properties are often in a bad condition, as the time consuming process for the court to get it conveyed to the bank just keeps it sitting without any maintenance or care. Although you have to invest some money into it (landscaping and garden is not taken care of, possible humidity or mold inside, missing appliances or devices etc.)  you can get a good deal unless you have to compete in a bidding war with dozens of other potential buyers.

The buying process of a foreclosure is pretty similar to the  traditional one. The only difference is that after you have made your offer (and the bank wants to sell the property to you)  you will automatically receive a counteroffer. In this so called addendum the bank states their own terms which you have to accept in order to get a contract. One of the things in there might be a penalty amount per day if you at your own fault have to postpone the closing - another thing is that the bank will make no repairs under any circumstances and also will not renegotiate a lower price if your home inspection reveals any major issues. In this case you can still cancel the contract.  Of course further changes can be the purchase price, the escrow deposit etc. In the end these addenda are not to be seen as a problem,  you  just have to make sure you understand what it says - and for that you got a Realtor like me!