What, exactly, happens when a foreclosed home is bought?
Say that Peter & Jane buy a house for $200,000. After a number of years of payments, the remaining principal is $140,000. Peter & Jane can’t keep up the payments, and the home is foreclosed upon.
When a buyer buys the house, what do they pay? The remaining principal? The original price? The current market value of the house? Do they take over Peter & Jane’s payments, or must they get their own mortgage?
You’re just buying it from the bank at whatever price you and the bank agree upon. You still get your own mortgage, etc.
You’ve asked a bunch of questions and most of the answers are “It depends on the seller.” The mortgage holder may put the property on the market for a fair asking value or may put it up for auction to get the highest price. The original principle would have late fees and other legal fees added to it, which would increase the amount due.
The chance of the new buyer taking over the old mortgage on a foreclosure is nil. They will have to get their own mortgage. The mortgage holder can also demand the buyer put up a certain amount–usually 10 - 20% so the don’t have to risk taking the property off the market for a smaller amount.
The buyers pay what ever they agreed to pay which is probably not to far from the price similar houses in the neighbor hood have sold for recently.
The bank gets the money and if there is any money left after paying off the loan it goes to the previous owners. But almost always the house is sold for less that the loan otherwise the previous owner would have sold it himself and avoided the trauma of foreclosure.