How to Buy Foreclosure Houses and Bank Owned Properties

Foreclosure houses and bank owned properties can be an excellent choice for first time home buyers and real estate investors. These types of homes are priced below market value and can be purchased using special finance programs and grant money. Depending on the condition of the property, some lenders allow buyers to obtain additional funds for repairs.

With a little hard work foreclosure houses can be transformed into the perfect home or investment property. However, before investing in distressed properties, buyers must become educated about the process of buying homes through foreclosure auctions or directly from mortgage lenders.

Foreclosure homes are sold through public auctions. In most cases, attendees must pre-register for the event and obtain prequalified financing. Buyers submit a bid on properties at the auction. If their bid is accepted, buyers are required provide a certified check in the full amount within 24 hours.

Buyers are allowed to view foreclosure real estate prior to the auction date. Properties must be carefully inspected and appraised in order to obtain the current market value. Purchase prices can be further negotiated if the home requires substantial repairs or renovation.

Most foreclosure houses require some level of restoration. Unfortunately, it is a common occurrence for evicted homeowners to cause property damage. It is not uncommon to find foreclosure homes in disarray. Many disgruntled homeowners will remove kitchen counters and sinks, bathroom fixtures, carpet and flooring, and window screens. It is important to obtain a repair estimate prior to placing a bid on foreclosure properties.

It is a good idea to work with a foreclosure specialist, such as a real estate agent or private investor. These professionals understand the pros and cons of investing in distressed properties. They can offer advice; quickly locate foreclosure homes for sale; and provide comparable sales reports on other homes in the area to determine an appropriate bid offer.

Foreclosure specialists are able to access the Multiple Listing Service (MLS) database which can save buyers time in locating foreclosure homes for sale. MLS databases provide nationwide home listings that include foreclosure, bank owned, and short sale real estate.

Four options exist for buying foreclosure houses. The first involves buying houses through public foreclosure auctions. The second involves hiring a real estate agent to submit bids on your behalf. The third involves purchasing pre-foreclosure homes directly from homeowners through a short sale agreement, while the fourth involves buying houses through real estate investors.

Bank foreclosures refer to properties that did not sell through public auctions and have been returned to the bank. Also known as real estate owned or REO homes, these properties are usually priced higher than foreclosure houses. However, REO homes are sold with a clean title and eliminate problems typically associated with foreclosure properties.

Foreclosure houses and bank owned real estate can provide substantial savings as long as buyers take time to engage in due diligence. There are an abundance of foreclosed and REO properties on the market. By taking time to become educated about the process of buying distressed properties, buyers can save thousands of dollars and locate a great place to live or a profitable investment home.

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Source by Simon Volkov