Posts Tagged ‘Foreclosure Properties’

Bank foreclosure properties – what are they and how do I buy one? Bank owned property numbers and opportunities are growing nationwide, but unless you are an experienced investor you need to know where to look, what should you expect and how to buy one?

Bank foreclosure properties also known as REO (real estate owned) are properties that have been repossessed by the bank or lender due to a loan default and resulting foreclosure. This normally occurs when a homeowner falls behind on their mortgage payments. These are properties that were given back by the homeowners in an agreement to avoid a worsening situation (including further damage to credit or additional debt through penalties and legal costs) or were not sold at the initial foreclosure auction.

Once the lender has regained possession of the property they will attempt to sell the property through further auctions, directly or through an established real estate broker. How do you find these bank foreclosure properties? Large banks may have their own departments set up to take offers and bids on these properties, but a good Realtor should have access to all the bank foreclosures and REO listings available in the area. The bank will certainly have enough power on their side, so you definitely want a professional looking out for your interests.

What should you expect when looking at bank foreclosure properties? Banks will make sure you have clear title when you purchase one of these properties and that all liens are cleared, something that is not necessarily guaranteed when you buy property at auctions. Commonly banks may do nothing to improve the property to save throwing good money after bad. Many of these bank foreclosure properties will have been trashed by the previous homeowners who often will remove everything of value from the property. And as they are left vacant vandals and thieves may strip the property even further, taking the pipes out of the walls and more. This is in contrast to those properties that had loans guaranteed by the government and come under HUD control. HUD properties can also be bid on and HUD will often begin repairs by replacing kitchens and bathrooms. But usually the price and discounts reflect the condition of the property.

How to buy a bank foreclosure property? Again you will want an experienced real estate professional representing you and professionally writing your offer. Keep in mind when bidding on a bank foreclosure property that the banks will often be receiving multiple offers on these homes and the banks will normally go with the cleanest, easiest offer even if it is not the highest. They will look not only at your offer price, but also what type of financing you are taking, how much deposit you are making and more. The bank will try to control the transaction as much as possible including choosing which title company handles the deal.

Buying bank foreclosure properties can prove profitable but purchasing REOs will require patience while dealing with and waiting on the banks.