Bank owned property is a great way to buy real estate at discounted prices. Bank foreclosures consist of residential homes, commercial properties, and vacant land. Whether looking for a first home, vacation house, investment property, or business real estate, bank owned properties might be the perfect solution.
In order to purchase bank owned property, buyers must present offers through the bank’s loss mitigation division or assigned realtors. When banks control multiple foreclosures they often use local real estate agents to list and show properties, and present offers. Buyers should be aware that banks rarely deviate from the asking price unless extensive repairs are revealed during property inspections.
Banks often take a hard financial hit during the foreclosure process. The average loss per foreclosure property is estimated at $60,000. The primary goal of banks is to recoup the bulk of losses when selling repossessed properties. Buyers should plan to offer the full asking price or slightly below.
The majority of real estate foreclosures require repairs. This is particularly true of residential homes. Sadly, foreclosed homeowners often retaliate against lenders by causing property damage. It is not uncommon to find appliances removed; flooring and walls destroyed or defaced; or broken windows and plumbing fixtures.
Real estate prices are based on current market value and adjusted according to required repairs. Buyers must do due diligence by obtaining property appraisals and home inspections. Repairs discovered during home inspection that were not recorded in original documents can be used to negotiate the purchase price.
Bank owned property is typically priced at least 10-percent below market value. However, options exist that allow buyers to obtain additional discounts. The first involves buying homes through Fannie Mae’s Home Path Mortgage program.
This government sponsored mortgage financing program offers a wide range of discounted foreclosure properties. Many of the homes for sale are located in areas witnessing a higher than average rate of foreclosure and may qualify for Neighborhood Stabilization Program grants offered through HUD.
Fannie Mae established Home Path to liquidate their nationwide inventory of bank foreclosures by offering special financing options. Home Path can be a good choice for buyers with bad credit and those who cannot afford down payment requirements associated with conventional home mortgage loans.
Home Path requires a minimum 3-percent down payment and allows borrowers to obtain down payment assistance from outside sources; which is prohibited when obtaining financing through conventional lenders. Program details and foreclosure property listings are provided at HomePath.com.
Another way to buy bank owned property at discounted rates is by seeking out real estate investors who buy bank portfolios. When investors purchase foreclosure properties in bulk they obtain wholesale pricing which leaves them room for profit while selling real estate below market value.
Last, but not least, buyers should consider looking for bank owned property that has been on the market for 60 days or longer. Banks will sometimes negotiate prices when real estate has become stagnant or when no one submits an offer.
Using grants in conjunction with Fannie Mae foreclosures or wholesale real estate can further maximize savings and return on investment. Those who take time to research options and become educated about the process can potentially save upwards of 30-percent or more.
It is best to obtain information from renowned mortgage financiers and government agencies or real estate lawyers and investors who specialize in buying and selling bank owned foreclosure properties.