subject: Buying Bank Owned Properties as Primary Residence or Investment Real Estate [print this page] Bank owned properties consist of all types of real estate which has been foreclosed upon by the lender. When borrowers default on their mortgage loan and banks repossess the property, it is first placed for sale through a foreclosure auction. If no one meets the reserve price at auction, the property is returned to the bank and listed for sale through bank loss mitigation or a Realtor.
Bank owned properties can make good investment properties because they are often priced 10- to 20-percent below market value. Bank owned foreclosures are sold 'as-is' and buyers are responsible for required repairs. However, unlike buying houses through foreclosure auction, properties owned by the bank are sold with a clean title; allowing buyers to take quick possession.
Bank foreclosures can also be a good choice for first time home buyers and individuals looking for a second home. Business owners often turn to bank owned real estate when seeking out retail space or business offices. Developers can save money on parcels of raw land which have fallen into foreclosure. The possibilities for buying bank owned property at discounted prices is endless.
The process of buying bank owned foreclosures is not much different than buying from individual sellers. The primary difference is buyers submit offers to the lender or their designated real estate agent.
Banks rarely enter into price negotiations because properties are already discounted. Banks lose a considerable amount of money during the foreclosure process and need to recoup their losses. Investors who buy homes with cash might have a better chance of obtaining reduced prices because the transaction can close quickly. Investors and individual buyers in need of financing are required to obtain preapproved financing prior to submitting bids on bank foreclosures.
In addition to buying real estate with cash, buyers might be able to obtain reduced pricing by scouting out bank owned properties that have been on the market for 60 days or longer. Bank loss mitigators are usually more open to price negotiations when foreclosure real estate has been listed for several months.
Another option for buying bank owned homes is Fannie Mae's Home Path Mortgage program. Home Path offers buyers many advantages including low down payment requirements, reduced price real estate, and bad credit financing options.
Many of the Fannie Mae foreclosures are located in areas that have been hit hard by foreclosure. Home buyers and investors should consider applying for Neighborhood Stabilization Program grants offered through the U.S. Department of Housing and Urban Development.
NSP grant money must be used to rehabilitate the property. Qualified home buyers can obtain one NSP grant, while investors can apply for up to five federally-funded grants. Fannie Mae foreclosure properties include residential and commercial real estate, vacant land, and industrial parks.
Finding exceptional bank owned properties at discounted rates does require time, but can provide significant savings. Buyers must engage in due diligence and obtain property inspections, real estate appraisals and repair cost estimates. If major problems are revealed during inspection, buyers can utilize the information to negotiate the purchase price or choose to walk away and locate properties that require fewer repairs.
One thing is certain there are plenty of bank owned properties for sale. In order to obtain the best deal, buyers should take time investigating a variety of properties. Most banks publish a list of foreclosure properties for sale on company websites and realtors provide foreclosure lists upon request.
Buying Bank Owned Properties as Primary Residence or Investment Real Estate
