Before the bank owns the property to sell, the property will go through foreclosure. The foreclosure process can be long. Typically the owner of the property will stop making payment and then will be issued a notice of default. After 3 missed payments the property will begin the foreclosure process. The property will be basically reposed and sold at auction. You the buyer have no way of knowing the condition of the property as this point and often buyers buy these homes sight unseen at auction. In addition there may be additional liens on the property, such as back property taxes due, unpaid garbage bills, etc. What is good about the bank owned properties is the bank will clear title (pay off all liens) before they sell the property.
Having a good understanding of bank owned and the foreclosure process will help you make an informed decision about these homes and if they are really a good buy for you. Also I would suggest finding a Realtor who is familiar with bank owned homes to help you navigate the process.
Alain Pinel Realtors
Depends, Bank Owned (or REO) listings are sometimes presented as Foreclosures on the MLS or in advertising flyers.
A foreclosure is where you go to an auction on the courthouse steps and bid for the property. Very risky because you generally have no opportunity to inspect the property, you have to pay cash on the spot, and you're buying the property subject to (meaning you assume) all senior encumberances and deeds of trust. Buying foreclosures is not for the inexperienced investor.
By contrast, a bank owned, or REO property is generally being marketed by a Realtor working with the bank to sell the home. You have the opportunity to visit the property before you submit your offer, and you generally have a contingency period to fully inspect the property before you finally commit to buying it.
Much better situation for the average home buyer! Hope this helps.
Happy house hunting!