If you are trying to find a new home at a good price, you might have family and friends mentioning that you try to find a foreclosure property. In theory, this is not a bad idea. A home that is for sale because the current owner defaulted on his or her mortgage could sell for far below market value. In the wake of COVID-19, however, foreclosures have all but stopped, thanks largely to a moratorium put in place on foreclosures on federally insured mortgages. Private lenders have mostly followed suit, which means that there are probably not many foreclosure properties available. The good news is that you may have another option for finding a good value: a real estate owned home, more commonly known as an REO property.
What Is an REO Property?
When a home is foreclosed on due to default on the mortgage, the lender (or current holder of the mortgage loan) will eventually seize the home and attempt to sell it. This sale usually takes place at a public auction. In most cases, a foreclosure auction does not give participants the opportunity to see the property or inspect the home ahead of time. This means that bidders are effectively making offers on a property about which they know very little. Additionally, the highest bidder is usually required to pay cash for the property at the time of the auction. Financing is uncommon at foreclosure auctions.
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