It is Possible to Take Part in a Foreclosure Auction

It is possible to take part in a foreclosure auction. But for those hunting for residential units the better option is to buy REO properties (Real Estate Owned) – the route being less risk. If the bidders at the auction do not come up to the minimum price laid down by the bank then the latter will purchase back the property and then sell it off as real estate owned.

The buyer of a REO property is free from any trouble coming from frustrated previous owners or a tenant proving difficult to evict. During the redemption period this fear is there – the previous house owner may try to get back the house.

For the financial entities the REOs are a weight and as such they attempt to dispose of it as quickly as possible to recover at least part of the losses. Generally they answer to purchase offers within days of the auction and will try to close the deal as fast as possible.

This can be contrasted with a short sales wherein the troubled owners try to skip foreclosure and attempt to sell the unit directly to a buyer at a price that is less than the loan due amount. For this reason the lender has to agree to this deal. At Las Vegas nearly half the properties on the shop shelves are in the short sale category. Adele Hrovat is an agent for the purchasers. Hrovat said that short sale is a time consuming process – might take up six months before the bank will give the nod. The actually inking of the deal may go up to a year.

To avoid this hassle Ralph Spence hunted around for a REO property last summer in Las Vegas. He was under the impression that the prices had dropped substantially to make worth its while; his limit was $200,000. The first bid was an offer from someone paying the entire amount in cash and as such Spence failed to make a mark. He then made a bid on another house having five bedrooms after viewing photographs.

The lender was asking $180,000 as the minimum price. Spence made the full offer. The lender parried by making a request for the best and highest offer he could make. He came forward with $196,000 with the condition that he be allowed to inspect the property and seek for financial support.

The bank accepted the offer of Spence. The latter heaved a sigh of relief to see that the house looked as good as the picture. During the inspection only minor defects were noted.