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Buying Bank Owned Real Estate

As with any realty investment, buying bank owned properties should be carefully scrutinized. While it is true bank owned homes are priced below market value, they may not be as good of a deal as buyers anticipate.

Buying bank owned real estate is no different than buying properties listed through any independent real estate agent. The primary difference is banks hold the property title and negotiations are held with the servicing lender's loss mitigation department.

One of the biggest advantages to buying a foreclosure house through banks is properties are sold with a clean title. There are no tax liens, creditor judgments or evicted homeowners who refuse to leave. Once the bank repossesses real estate, they take measures to remove anything which could prevent a quick sale of the home.

Perhaps the biggest disadvantage to buying bank owned homes is there is little room for price negotiation. When mortgage lenders enter into foreclosure they place properties for sale through public auctions. If no bids are placed on the real estate, it is returned to the bank and becomes part of their investment portfolio.

Since banks are in business to make money, holding toxic assets can cause serious harm to their profit margins, which in turn affects how much money they can receive from the Federal Reserve Bank. Additionally, banks lose money on foreclosure properties because borrowers' have not paid mortgage payments and due to expenses associated with the foreclosure process.

With that being said, bank owned foreclosure properties can make a perfect first home, vacation home or investment property, as long as buyers engage in due diligence. All bank owned properties are sold in "as-is" condition and buyers are responsible for the cost of repairs.

Interested parties can obtain home inspections and real estate appraisals to determine the property value and repair estimates. When major problems are revealed, repair estimates can be used to further negotiate the price. Most real estate investors utilize broker price opinion appraisals to reduce associated costs.

There are two types of broker price opinions and include: drive-by BPO and internal BPO. Both can provide buyers with property values and estimated repair costs needed to prepare the property for sale.

Buyers of bank owned foreclosure real estate must provide proof of funds when submitting offers. Unless buyers are capable of buying houses with cash, they must obtain prequalified financing through the mortgage lender of their choice.

Bank owned properties available through the real estate foreclosure list include all types of residential properties, as well as commercial real estate. Single family residences can be purchased for as little as $5,000 and upwards of $5 million.

One option to buying bank owned foreclosure real estate is to locate private investors who buy and sell distressed properties. Some real estate investors purchase bank portfolios consisting of dozens of homes. Buying in bulk allows investors to obtain wholesale pricing, which can result in substantial savings to buyers.

Simon Volkov specializes in buying and selling bank foreclosure properties. Mortgage lenders, real estate investors, and individuals can submit real estate listings through Simon's real estate investors club which are broadcasted to club members.

Presently, there is no fee to join the investors club to locate exceptional real estate deals. All that is required is to submit your email address in the Investment Club subscription box on the left sidebar. Members receive instant notification when new bank owned foreclosures become available.

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Published on May 06, 2010 at 03:20 AM

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