Lenders have been flooded by foreclosures over the past five years. Foreclosure is usually the worst result for everybody concerned — the homeowner, the lender, the community.
So lenders are trying to achieve short sales and auction sales of distressed properties.
When you buy a foreclosure at an auction, you are usually expected to pay the full price in cash and you usually do not have a chance to fully inspect the property you are buying.
Amy Hoak reports: When a home buyer looking for a place to live considers a foreclosure, they’re usually looking at those listed as “REO” or “bank-owned,” meaning that the lender has taken back the property and is now putting it up for sale. But REO sales have been shrinking.
There are a couple of reasons.
First, more properties are selling at auction, typically the first opportunity the lender has to sell the property and where buyers are mostly investors. Buying a foreclosure at auction often requires full payment in cash, and the buyer often doesn’t get the chance to fully inspect the property before buying it–both turnoffs for a home buyer looking for a place to live.
“Anecdotally, we’re hearing from investors that the lenders are more aggressively pricing the opening bid at the auction to attract more bidders,” said Daren Blomquist, vice president of RealtyTrac, an online foreclosure marketplace. In a more typical market, the lender sets the opening bid at what they’re owed on the property, he said.