The foreclosure process

There can be 3 phases when the owner of a home defaults on his loan. (default = can't or WON'T make the payments) 1. Short sale
The owner negotiates with the lender that the lender will take part of the mortgage as a full payment of the original mortgage, example:
John Doe buys a home and after 2 years he defaults on his mortgage.
bought home for $300 000
mortgage left after 2 years: $280 000
current value home: $160 000
He negotiates with the bank to sell his home for $160 000. His credit score drops by 50 point and the bank doesn't have to go to the lengthy and expensive foreclosure process. The bank has just lost $120 000, auch.


2. Foreclosure
After a NOD (notice of default) the bank starts the foreclosure process and the home is sold at an auction to the highest bidder. Depending on the place where it is sold a 10% downpayment on the spot is necessary + the rest of the amount has to be paid within 24 hours.


3. Bank owned property
When no one bids on a foreclosure or no one wants to bid higher than the lowest price the bank would accept, the home is returned to the bank. The bank now has a home instead of a paper LOL. It now sells the home on the market, because they are not into (lol) the business of selling real estate, they want to sell ASAP. To achieve a fast sale, they price the home under the current market price. A bank owned property is a home that no one else wanted in the foreclosure process...
It is easy to inspect the inside or outside of a bank owned property but gas, electricity and water were mostly turned off for a few months. A potential buyer needs to pay for turning on water, gas and electricity before he can inspect the home.

A bank owned and foreclosure sales are "as-is", no refunds or no warranty.