Bank owned properties refer to real estate that has been repossessed by lenders. Most states require foreclosure properties to be placed for sale via public auction. If properties do not sell at auction they are returned to the servicing lender. Banks can elect to hold properties or list them for sale at discounted prices.
Bank owned properties can be a good choice for investors who are unfamiliar with buying houses through auctions. They also make a good choice for individuals who want to buy houses below market value. However, investors and buyers must be aware that most foreclosure real estate requires some level of repair. Those costs must be factored in when submitting purchase offers.
One consideration of buying realty through foreclosure auction is many states offer a redemption period that allows foreclosed homeowners the option to buy their house back from the winning bidder. This is not the case when buying real estate owned by banks.
Another advantage of buying bank foreclosures is properties are sold with a clean title. Buyers can take quick possession and make necessary repairs. This is particularly helpful for investors and allows them the opportunity to generate positive cash flow soon after closing the purchase.
Bank owned real estate consists of all types of properties including residential homes, commercial property, and undeveloped land. Not only can investors and individual buyers save money, so can business owners in need of warehouse or retail space, manufacturing facilities, or business offices. Developers can save money buying parcels of land that have been repossessed due to loan default.
Buying bank foreclosures isn?t much different than buying real estate from private sellers. Banks normally list properties through realtors, but some manage sales through their loss mitigation department. Regardless of who handles the sale, buyers submit purchase offers and banks either accept or reject the price.
Banks normally do not accept offers for less than the asking price. The foreclosure process is quite costly and banks need to offset losses. Banks might entertain offers for less if the property has been on the market for long periods of time or if buyers? present cash offers. Buyers that require bank financing must be prequalified before submitting offers on bank owned properties.
A relatively new option for buying bank foreclosures is Fannie Mae Homepath properties. This government sponsored program offers a variety of residential homes ranging in price from under $5,000 to well over $1 million. Qualified buyers can finance Fannie Mae homes through Home Path Mortgage; a program that offers special incentives and minimal down payment requirements.
Many investors find Fannie Mae foreclosures attractive because of the discounted prices and financing options. Additionally, many houses qualify for NSP grants offered through HUD. The Neighborhood Stabilization Program was developed to provide funds to buyers who rehabilitate properties in areas with staggering rates of foreclosure. Investors can obtain a maximum of five NSP grants, while individual buyers can obtain one.
Finding bank owned properties is not difficult, but does require buyers to conduct due diligence to ensure properties are worth the asking price. It?s best to spend time investigating a variety of properties to obtain the best deal.
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