How exactly do foreclosures work?
No. Getting a foreclosure is not like renting. Getting a foreclosure is like buying a home. A foreclosure is when someone owns a home, but they fail to make payments to the bank. The bank then forecloses, meaning it becomes the new owner. At some point, the bank then decides to sell the house (because banks aren’t in the business of being landlords; they’re in the business of lending money). The bank lists the home with a Realtor. In today’s market, Realtors are selling “normal” homes–ones that the owners are current in payments with, “short sales”–ones where the owners are falling behind and owe more than the house is worth, and “foreclosures”–ones owned by banks. There’s a misconception that foreclosures are great bargains. Sometimes they are. Often, they’re not. Banks aren’t that dumb. Before they list a house for sale, they do the same thing most owners do. They get an estimate (in their case called a BPO) of what the house is worth.
Chosen by Asker No. Getting a foreclosure is not like renting. Getting a foreclosure is like buying a home. A foreclosure is when someone owns a home, but they fail to make payments to the bank. The bank then forecloses, meaning it becomes the new owner. At some point, the bank then decides to sell the house (because banks aren’t in the business of being landlords; they’re in the business of lending money). The bank lists the home with a Realtor. In today’s market, Realtors are selling “normal” homes–ones that the owners are current in payments with, “short sales”–ones where the owners are falling behind and owe more than the house is worth, and “foreclosures”–ones owned by banks. There’s a misconception that foreclosures are great bargains. Sometimes they are. Often, they’re not. Banks aren’t that dumb. Before they list a house for sale, they do the same thing most owners do. They get an estimate (in their case called a BPO) of what the house is worth. Then they’ll usually list it
Hi Shannon, Great question. Since I work with many banks and often get listings from them, I am really very familiar with the process. I would say that in general no, the asking price usually isn’t what the buyer ends up paying. However, it really does depend if the home was priced accurately when first listed by the bank. Banks are willing to work with a buyer but if they have a certain number that they want they will be stern with their price. I once had a buyer put in 4 offers and all were declined by the bank. But, when the home didn’t sell, it actually sold for less than my buyer’s 4 offers. My buyers did ask for money back from the banks for things that needed repair and the banks did give them to the buyers. I always ask for money back from the bank. Sometimes the banks do ask that the buyer pay for all of the transfer taxes or to get the home’s Use & Occupancy from the city which states that the city doesn’t have any issues with the home that need to be taken care of. Your Real
