A bank foreclosure also known as Real Estate Owned (REO), is a property that goes back to the mortgage company after an unsuccessful foreclosure auction. At the foreclosure auction, the bank usually bids the amount owed. If somebody bids higher, then that bidder buys the property and the bank is repaid in full. If nobody bids higher, then the bank is the winning bidder and becomes the owner. REO's are a liability for the bank rather than as asset. Therefore, you can get a great deal on a home when buying an REO property.
More often than not, bank-owned properties are sold at below-market prices with low interest rates and down payments. Generally they involve less risk, are clear of any liens and are vacant because the bank as already evicted the homeowner.
Visit our Education Center to get more information about buying bank-owned properties in your area.