 TITLE: How to Buy A Foreclosed Home CONTENT: What Is a Foreclosed Home?\n--------------------------\nA foreclosed home is one that has been seized by a mortgage lender (typically a bank, credit union or financing company) after a borrower failed to make required payments on their home loan.\nBecause lenders typically don't want to own these homes long term, it's possible to scoop up a foreclosed home at a bargain. It's important to remember, however, that foreclosed properties are sold \"as is,\" and can have cosmetic and structural problems and financial encumbrances, such as back taxes, that typically aren't concerns when you're buying a home from a builder or private owner. A foreclosure may have been sitting vacant for a period of time, its yards may be overgrown, and the previous owner may have left items behind that'll need to be dealt with. Sometimes, an angry owner even vandalizes a property or strips out expensive wiring or piping before they depart. These issues shouldn't stop you from taking advantage of the potential savings, but it's important to prepare for the hazards.\nForeclosed properties available for sale fall into two broad categories: bank-owned properties and real estate-owned (REO) properties.\nBank-owned properties are in the process of being reclaimed by the lender and put up for auction. It's possible to make an offer for a property before it goes to auction, when the lender may still be working to evict the previous owners, and liens for back taxes or unpaid bills are still attached to the property. Typically by the time a property goes to auction, the lender has settled any liens, but it's wise to double-check the title and factor any such encumbrances into the price you're willing to pay.\nREO properties are typically still owned by the lender, but only after they have failed to sell at auction. These properties may be in a more distressed state than those that sold readily at auction. While they may not be accessible for walk-throughs, it is often possible to do a cursory external inspection to spot issues that can help you narrow your search or adjust your offer price. END