I think this blog mis used some terms: Foreclosure vs. auction as a
foreclosure process.
Foreclosure is a process/proceeding. It includes 3 steps:
1. Short sale, in which both seller and bank decide together how much the
property should be sold, if the debt owned to bank could be forgiven, if the
condo fee owed to HOA could be forgiven... It is for sale at the price
lower than what owner owes to the bank. There are so many pitfalls like lien
may not be marketable because owner owes money to two banks and one is ok
with the price and the other is not. Lien is just one of many issues related
to short sale, others may be house condition issue because it is sold AS IS
. The seller accept buyer's price, usually low, does not mean it will be
sold that price. after months of waiting, bank comes back and asks a much
higher price and your time is wasted.
2. When no one buy a short sale, it goes on sale at auction. It must be cash
sale and normally it won't sell because few people has that amount to buy
up front. If you know good and cheap contractor and know the house is
located in great neighborhood, it then become a good deal. Otherwise it is
not.
3. REO or bank-owned. It is sold by bank in AS IS condition. If first 2
steps won't work, bank take it back and spend the least amount of money to
renovate it and make it look the most cosmetically presentable ever. It is
usually price a little lower than market price but factoring more fix and
repairs after buying it, it still may not be a good deal.
The best deals, however, that I encountered were property sold by seniors or
estate sale, the owner of which may die or their kids need cash to send
them to nursery home. That is what you usually get great deal.
