Question on foreclosures

[Jalon Wilson]

I wanted to get clear on something. Do you have to use hard money or private money on foreclosure properties? Or can I use a 203k loan if I plan on house hacking?

[Robert Haney]

Odie asks a good a question.  

The average person on the street thinks foreclosures are purchased from banks/lenders which is not true.  The industry calls these REOs (Real estate owned) since the bank is the HOMEOWNER who bought it at auction.  Sadly,  even many (most?) RE investors don't understand this.  The bank NEVER owned the property until they bought it at the foreclosure auction.

Every foreclosure is bought at auction, period.  Either a 3rd party (such as me) buys it or the bank buys it.  At that point the foreclosure sale is done. Over.  

If I buy the property at the foreclosure auction and sell it later, is the new buyer buying a foreclosure? He is as much as someone buying an REO from the bank. Strictly speaking, the new buyer is NOT buying a foreclosure and anyone buying an REO is not buying a foreclosure either. Again, the "courthouse steps" are only where foreclosures are sold.