Maryland Home Improvement PSI Practice Exam

In most states, foreclosed property is sold through which method?

1. Sealed bids

2. Public auction

3. Deficiency judgment

4. Right of redemption

The correct answer is: Public auction

Foreclosed properties are typically sold through public auction because this method allows for transparent and competitive bidding among potential buyers. In a public auction, interested buyers can openly place bids on the property, and the sale is usually conducted by the lender or a representative in a manner that ensures the process is fair and accessible to all interested parties. This method often helps to maximize the sale price for the lender, as the competitive nature of an auction can drive up bids. Other options, while related to foreclosure, do not typically describe how foreclosures are conducted. Sealed bids refer to a different bidding process where offers are submitted privately rather than through an open auction. A deficiency judgment is a legal action that a lender may take against a borrower to recover any remaining debt owed after a foreclosure sale but is not a method for selling property. The right of redemption is a period during which a borrower has the option to reclaim the property by paying off the mortgage or a set amount, not a method of sale. Thus, public auction stands out as the primary and most common method for selling foreclosed properties.