What are the different types of Foreclosed Homes?

Want to buy your dream home? Have you considered foreclosures? If you want to save money, you should start searching for foreclosed homes.

A foreclosure is a property that has been seized by the bank or the lender. This usually happens when the buyer is unable to repay the loan.

Thereafter, the lenders sell the property at a low price. This gives you an opportunity to buy the property which could have been expensive for you.

However, buying a foreclosed home is a little different than buying regular homes. You must know the different types of foreclosed homes to bag the best deal.

In this article, we will walk you through 4 types of foreclosures -

Also known as a short sale, a preforeclosure occurs when the homeowner has possession over the property and he is aware of the potential foreclosure.

It will be beneficial for the owners to sell their homes beforehand or else they would end up in foreclosures.

A short sale can be demanding too. In this process, the owners have to get permission from the lenders to sell the house at a lower amount as compared to what they owe on their mortgage.

Some lenders agree to take the loss in order to sell the home and repay the mortgage loan.

Real estate auction is a conventional way to buy a foreclosed home.

In an auction, a third-party trustee conducts an auction sale of homes and properties. They are usually owned by the bank or lenders when the homeowners cannot repay the mortgage loan.

One of the greatest advantages of an auction is when a buyer has the cash he could quickly get the house! However, there are other risks too.

If the property has a lien from the previous owner, then you will be obliged to pay the dues.

REO is the real estate owned. Foreclosed property can be bought directly from a bank or lender. All you need is look for REO listings.

A real estate owned is a foreclosed property that is not owned by the bank or lender. Furthermore, the bank has secured an auction for the home sale to recover the pending mortgage amount.

There are government-owned foreclosed properties. They are similar to the ones owned by the banks or lenders.

But, the government agencies take ownership of the foreclosed properties to recoup the pending mortgage loan amount.