What is a Foreclosure & REO (Real Estate Owned)? Part 1

A Foreclosure sale begins with a minimum bid that includes the loan balance, all accrued interest plus legal fees and any costs associated with the foreclosure process. In order to bid at a foreclosure auction, you must have a $10,000 cashier's check in your hand and the full amount of your bid is due within 24 hours after the sale has ended. As the successful bidder, you obtain the property in "as is" condition and that can include a tenant still occupying the property.  Recent legislation can prevent you from having the tenant removed and you may have to honor their lease with the previous owner so do your homework on this one before bidding.
In today's real estate arena the amount owed to the bank is almost always more than the value of the home resulting in very few successful foreclosure auction sales. Hence, the property "reverts" back to the bank and becomes an "REO" or "real estate owned" property.