The Wisdom of Participating in Bank Owned Auctions

by Peter Vernon on Foreclosures

There are various types of home auctions. The more popular ones are the government auctions, sheriff's sale and the bank owned auctions. Among the three, many people are of the opinion that the last one is the best.

What to Expect from Bank Owned Auctions

The first feature of bank owned auctions is affordability. The homes are priced very low as they have all foreclosed properties. Homes get foreclosed on when the owners fail to pay for the monthly amortization usually for three straight months. The process starts with a notice given by the bank to the home owner followed by a period when the owner can pay the outstanding obligation and failing to do so within the prescribed period will result to the actual foreclosure where the loan provider will take back the property.

Another feature of these homes is that they are sold as is or in their prevailing condition at the time of foreclosure. For buyers this simply translates to added costs that will go to the restoration of the home. The needed repairs will be the buyer's responsibility. If the home is still occupied by its former owners, it is likewise the new buyer's burden to effect an eviction. There are bank-owned auctions that come with outstanding taxes or liens that will also be the responsibility of the buyer.

Characteristics of Real Estate Owned Homes

More popularly known as REOs, real estate owned homes is another term for bank owned homes. When these home do not sell at auctions they become the property of whoever put up financing for the home, usually a bank. Some banks shoulder the cost of repairing homes to a level where they can be sold to the open market. Banks offer other perks to increase the market value of their REOs making them attractive to home buyers. REOs are better than homes sold at auctions in this manner. Apart from minor repairs, banks will also take care of eviction. The homes come with a clean title so a title search is no longer necessary.

REO properties are generally better than other foreclosures in terms of the ease of transaction. Banks are even open to negotiations as they are hard pressed to sell these homes. The longer the home has been in the selling block, the lower its price will be. But buyers should scrutinize the condition of the home all the same.

While there are undeniably great bargains at bank owned auctions, buyers should also check out foreclosures sold in other channels.