July 5, 2024

What Happens if a Foreclosed Home Is Not Sold in Missouri?

When a foreclosed home in Missouri fails to sell, it becomes a real estate owned (REO) property, which can have significant implications for both the lender and the former homeowner.

The foreclosure process in Missouri typically follows a nonjudicial route, meaning the lender doesn't need to go through the court system to foreclose on a property. So, it’s important that you understand the process. You’ll also want to explore alternatives to foreclosure, such as selling your house as-is for cash to avoid losing it.

What Is the Foreclosure Process in Missouri?

The foreclosure process in Missouri involves several key steps:

  • Notice of default: The lender must send a written notice to the borrower informing them that their loan is in default.
  • Waiting period: Foreclosure proceedings cannot begin until payments are 120 days past due.
  • Notice of sale: The lender must notify borrowers 20 days prior to a sale and post notice in local news sources 20 times.
  • Foreclosure auction: The property is sold at a public auction to the highest bidder.

What Happens at a Foreclosure Auction?

Foreclosure auctions in Missouri are typically conducted as public sales. The lender or trustee holds the auction, where interested parties can bid on the property. The lender usually makes a credit bid, which can be up to the total amount owed, including fees and costs.

If a third party offers a higher bid than the lender's credit bid, they become the winning bidder and acquire the property. However, if no one outbids the lender, the property becomes real estate owned (REO) by the lender.

What Happens if the Home Doesn't Sell at Auction?

When a foreclosed home doesn't sell at auction, it becomes a real estate owned (REO) property. This means the lender, usually a bank, takes ownership of the property. At this point, the lender becomes responsible for maintaining the property and paying any associated taxes or fees.

The lender's next steps typically involve preparing the property for sale on the open market. This may include making necessary repairs, cleaning the property, and listing it with a real estate agent. The goal is to sell the property and recoup as much of the outstanding loan balance as possible.

What Is the Impact of an REO Property on the Former Homeowner?

An unsold foreclosed property can have several impacts on the former homeowner:

  • Credit score: Foreclosure significantly damages the homeowner's credit score, making it difficult to obtain future loans or credit.
  • Loss of home equity: Any equity built up in the home is typically lost in the foreclosure process.
  • Deficiency judgment: If the property sells for less than the amount owed, the lender may sue the former homeowner for the difference.
  • Financial hardship: The loss of a home can lead to significant financial and emotional stress for the former homeowner.

How Do Banks Handle REO Properties?

Banks typically aim to sell REO properties as quickly as possible to recover their losses. They often list these properties at competitive prices to attract buyers. Some banks may offer special financing options or incentives to make the properties more attractive to potential buyers.

If a property remains unsold for an extended period, the bank might consider alternative strategies. These could include further price reductions, auctioning the property, or even exploring options like "cash for keys" programs, where they offer the former homeowners or current occupants money to vacate the property quickly and leave it in good condition.

Cash Home Sale: An Alternative to Foreclosure

A cash home sale is a transaction where a homeowner sells their property directly to a buyer who can pay in cash, often without the need for traditional financing. This option can be particularly appealing to homeowners facing foreclosure as it offers a quicker and more certain way to sell their property.

By opting for a cash home sale, homeowners can potentially avoid the foreclosure process altogether. This approach allows them to sell their home quickly, pay off their mortgage, and potentially salvage some of their credit score. It also provides an opportunity to resolve the situation before it escalates to a foreclosure auction or becomes an REO property.

What Are the Benefits of a Cash Home Sale?

Cash sales can close much faster than traditional sales, often within a matter of days or weeks. There's less risk of the sale falling through due to financing issues, as the buyer already has the funds available.

Cash buyers in Missouri are often more willing to purchase homes in various conditions, reducing the need for repairs or renovations. A quick sale can alleviate the stress and uncertainty associated with the foreclosure process

Sell Your House Fast in Missouri and Kansas

If you need to sell your house fast but don’t want the hassle of a traditional home sale, contact Brittco. We buy houses as-is. No repairs are needed. Avoid closing costs and realtor commissions. Close in as little as seven days. Call 913-219-5583 for a fast cash offer from our local home buyers in Missouri and Kansas