What is the difference between Foreclosed Properties and REO’s ? Is one better then the other? Where can a buyer get the best deal?

Let’s clear up the confusion. Bank Foreclosure – REO is a process – When an owner of a home that has a loan on the home fails to make their payments the Bank Forecloses on the home to take ownership of the home. This process takes different time in in different states but generally the home owner is 3 to 6 months behind on their mortgage when the bank will begin the Bank Foreclosure – REO process.

When the Bank issues a NOD or Notice of Default – this is a public notice that the bank is beginning the Bank Foreclosure – REO process. At this point the Home is in Pre- Bank Foreclosure – REO and the Home can sell the home to a buyer or investor and clear their debt with the bank and avoid the Bank Foreclosure – REO all together.

Depending on the the state the Home remains in Pre-foreclosure anywhere from 30 days to 6 months. After that time the Bank must auction the home and give public notice of the auction. The home owner can make the back payment and retain the home right up until the home is Auctioned. Once the Auction begins Investors/ Buyers can bid on the home and the highest bidder wins the home based on Bank Approval. The Auctions are rarely absolute auctions and the bank must approve of the final sales price to agree to the deal.

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