When a homeowner doesn’t pay their mortgage for a few months the bank will notify them that they are in default and at risk of being foreclosed on. If a homeowner is unable to get caught up then the bank will start the foreclosure process. The homeowner will then have a set time period to get caught up before the property is foreclosed on. If the owner can’t get caught up then the bank will auction off the property at the sheriff sale.
At the sheriff sale the bank will set a minimum bid of the total debt that is owed on the property. This includes the unpaid balance on the mortgage plus any fees and expenses the bank has incurred. If no one at the Sheriff Sale is willing to pay the minimum bid then the ownership of the property reverts to the bank and the property is now what we call an REO or Real Estate Owned.
Now you could buy a property at the Sheriff Sale but I consider this to be very risky. Check out part 2 of the series for the 3 major reasons you should not buy a property at the Sheriff Sale. As always, if you are looking for more information please contact me directly.
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