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The term foreclosure home is also sometimes used to describe a property that is currently in the process of being foreclosed. If the owner is trying to sell the home before the bank forecloses it is often referred to as a short sale because they are usually going to sell for less than they owe (sell short) but not every property that goes into foreclosure is worth less than the loan balance.
From a buyer's stand point there are three opportunities to buy a "foreclosure home". First while it is in the process but before the bank completes the legal action you can buy directly from the home owner but if the purchase price is less than or "short" of what is owed the lender then buyer and seller will need to get the lender's approval. Second you can buy at the foreclosure sale which is a open live bid event that here in New Mexico is held at the steps of the county court house where the property is located. The lender that foreclosed will have a representative there to bid on their behalf and they can bid up to the full amount they are owed, including interest and penalties, but they sometimes elect to bid less. If anyone "out bids" the bank they get the property, subject to any redemption rights, but they require certified funds by the end iof the day so you basically have to buy cash. In most cases the property goes back to the lender that held the mortgage and the property becomes an REO. This is your third opportunity to buy, as an REO from the lender. In most cases these are solod as is where is. Banks generally will not pay for inspections or repairs.
I could go into more detail but my post is long winded enough. If you have more questions feel free to contact me. I have sold several hundred "foreclosures" over the past 12 years both as a buyer's broker and as a listing broker for the banks. I would be glad to answer any questions or explain this in more detail. All my contact information is available on my website, rioranchorealty dot com.