In most states at the sheriff/foreclosure/etc. sale the bid in excess of debt would go to the former owner.
After the sale when its an REO, the bank can and does keep anything that they might make. In my experience they don’t make anything on the overwhelming majority.
The properties are often poorly maintained, deferred maintenance etc. and the debt is high or exceeds the value when you consider taxes and municipal leins which take precedence.
David
How can I determine the amount that was remaining on the mortgage when the property became REO (bank was the winning bidder).
I think (but I am not sure) that the lender has to give the former owner the excess above what was owed to the lender if the property is purchased from the bank after expenses such as broker’s commission are taken out.
So it seems that the bank would have no desire to sell the property for more than what was owed to them. The only reason I can see for prices on these properties to be at market value is for the broker to get more of a commission.
Knowing what was owed to the bank and using that figure as the offer price seems like the way to go.
Please clear up anything that I understand incorrectly.