Buying Bank Owned and Foreclosed Property

Everyone in today's market for a home is looking for a deal. One way that home owners can capitalize on the current economic situation and create instant equity is to buy a bank owned property, foreclosure, or short sale. Each of these situations have pros and cons which I will briefly explain.

Bank Owned Homes- Are usually homes that have been foreclosed on, the bank buys them back at the Sheriff Sale, and puts them on the market for sale. Bank owned homes usually need some work, typically cosmetics (paint, carpet, appliances, fixtures). Usually these bank owned homes are sold as-is, but are typically priced 10%-50% below the fair market value of homes in the area. The benefits of buying a bank owned home is that you can see and inspect the home before buying it and you can usually strike a pretty good deal. The downside is that you usually end up doing some work, and the bank rarely will make any repairs to the property.

Foreclosed Homes- Are homes where the bank has filed foreclosure paperwork on and the home will be sold at the Sheriff Sales. Buying a home at the Sheriff Sale comes with some risk. You can't really see the interior or inspect the home. You'll also be bidding against other investors, including the bank that holds the mortgage, as they want to protect their stake in the property. Also when you buy a home at Sheriff Sale, there may be people still living in the home that you will have to evict after you file the deed. I only recommend buying homes at Sheriff Sale for people who are experienced investors.

Short Sale- One of the best ways to get a bargain on your next home is to find a short sale. A short Sale is where the owner still owns a home, but they are negotiating with the bank or current lien holder, to accept less than what is owed on the property. With a short sale, you can still inspect the property and negotiate with the home owner for any repairs to be made to the property. The biggest downside to short sales is the time involved it takes to get the final bank approval. Many home buyers simply choose to move on because the banks don't move as quickly as they need them to, but if you have time on your side, it's a great way to get some instant equity in a home.

Whatever your home purchase plans are, you should choose to work with an agent that is experienced in type of purchase you decide to pursue. An experienced agent can provide you with negotiating advice, and will ensure that your transaction goes smoothly. The best part is that your agent gets paid by the listing agent of the property, and it's no out of pocket expense to you, the home buyer.