| Since there is an ongoing economic depression, more | | | | Eviction of Occupants |
| and more people are losing their homes. One of the | | | | In foreclosure process, the county sheriff performs the |
| major blows of this current condition is mortgage | | | | eviction process. In REO sale, the bank initiates it and |
| payment delinquencies. Homeowners, who became | | | | may involve an eviction coordinator. |
| unemployed or undergoing all kinds of hardships, are | | | | Various states have different laws as to eviction. |
| currently experiencing this crisis. As a result, their | | | | Therefore, the period may also vary. It can be as early |
| properties undergo foreclosure and eventually, a Real | | | | as 8 days or may be as long as 60 days from date |
| Estate Owned Sale. But what is the difference | | | | of notice. |
| between the two? Which one should you chose to | | | | Additional Information |
| purchase? | | | | Buyers of foreclosed properties may have tons of |
| Many people may not fully understand the difference | | | | competition. The deed of the house is granted to the |
| between a foreclosure property and a Real estate | | | | highest bidder. As you can see, even if the property |
| sale. To understand the terms effectively, read the | | | | cost is low, you still have to top the offer of the |
| following sections. | | | | highest bidder to win. This means you have to be |
| Nature of the property | | | | prepared to go all the way, if you really want the |
| Properties sold through foreclosure are those owned | | | | property that much. |
| by delinquent homeowners. The lien holders of the | | | | Another thing, foreclosure does not give their bidders |
| property have requested the court's assistance to | | | | the opportunity to make counter-offers in the event |
| repossess the house to terminate the borrower's | | | | that the property is defective. They cannot even |
| equitable right of redemption. | | | | obligate the court to make repairs before putting it on |
| On the other hand, a REO is a property that has been | | | | sale. |
| repossessed by the bank or the lenders after an | | | | On the other hand, sale of REO properties have more |
| unsuccessful auction. These properties may be free of | | | | advantage. Homebuyers can negotiate the prices. |
| lien upon successful negotiations by the bank with the | | | | Sometimes, lenders would end-up fixing the place up to |
| other lien holders (such as the HOA and IRS). | | | | increase its value. Another good thing about this sale is |
| Manner of Selling | | | | that homeowners will be assured that the property is |
| Foreclosure sells properties through an auction. Court | | | | already free of all liens. Moreover, buyers can freely |
| officer or county sheriff may facilitate the bidding. The | | | | move-in the property after the closing time because |
| bidding price may be set initially that which is equivalent | | | | the house will be vacant. |
| to the borrower's outstanding loan but not more than | | | | Deciding What to Purchase |
| the current market value of the property. In this case, | | | | Deciding what to purchase may depend on what is |
| the initial price should be levered with the lowest | | | | important for you. You really have to weigh the |
| possible value. | | | | advantages and disadvantages of buying both |
| Real Estate owned properties are sold directly by the | | | | properties. However, there is one thing buyers can be |
| bank. They are quite expensive compared to | | | | assured of: the acquisition cost of the property can be |
| foreclosure properties since lenders would take every | | | | fairly low for both types of sale (although foreclosure |
| opportunity for them to re-gain their losses. This means | | | | sale have considerable low prices than REO sale). But |
| pricing may be based on the outstanding loan plus | | | | as to the smoothness of the home buying process, |
| other foreclosure costs. | | | | REO may have the edge. |