Five Types of Foreclosure Properties

Experienced entrepreneur Kyle Krch owns and works with four different companies in the Reno, NV area, including his first company Krch Realty. One of Kyle Krch's newest companies, Heartland Neighborhood Homes, is a realty company with a primary focus on selling foreclosed homes.

There are five main types of foreclosure properties that you can purchase. Finding them depends on where exactly they are in the foreclosure process:

1. Pre-foreclosure is a stage during which the borrower has been notified by the mortgage lender that they are currently in default, but the property has not yet been offered up at auction. Some homeowners can sell their homes during this time, thereby avoiding negative effects on their credit.

2. Sherriff’s sale auctions typically occur after notification of default and an allowed grace period. These types of auctions often occur on a city’s courthouse steps, and they are designed to allow the lender to be repaid quickly.

3. Short sales are properties where the lender is willing to accept less for the property than is owed on the mortgage loan. Interestingly, borrowers don’t need to be in default for a lender to sell a property through a short sale, though the lender is typically required to prove a financial hardship that would likely result in default.

4. Government-owned properties are properties that were purchased with a loan that was guaranteed by the Federal Housing Administration (FHA) or by the Department of Veteran Affairs (VA), causing them to be repossessed by the government upon foreclosure.

5. Bank-owned properties are properties that did not sell at auction, reverting to the banks, and becoming real estate owned (REO) properties. Typically, these properties are managed by the particular financial institutions REO department.