What are Bank Owned Homes?

Bank Owned Sign

Bank owned homes are a unique type of real estate that is sold directly to the public by banks. Normally, banks wouldn't be in the business of selling real estate, but bank owned homes are sold due to special circumstances involving a foreclosure.

When a homeowner takes out a home mortgage loan, one of the stipulations is that if the homeowner stops making payments on their loan, the bank can foreclose and attempt to sell the property in order to win back the money they've lost on the loan. Usually this happens through a public foreclosure auction. However, properties at foreclosure auctions don't always sell for the minimum bid amount, and in some cases a foreclosure may be awarded directly to the bank. Also known as REO (real estate owned) homes, bank owned properties are properties that have come under bank control due to a foreclosure, that the bank is now trying to sell.

Why are Bank Owned Homes Important?

Bank Owned homes

For buyers, bank owned real estate can present one of the best opportunities on the market. Since the bank needs to sell the property fast, and since they only need to recover an unpaid portion of the previous mortgage loan, and not its full amount, bank owned homes for sale are often priced anywhere from 30% to 60% below what their market value. When it comes to savings, there just aren't any better deals out there. And best of all, bank owned homes are sold all over the nation by all kinds of banks. All you have to do is know where to find them, and that's exactly where BankForeclosuresSale.com can help you.

How can BankForeclosuresSale Help you Find Bank Owned Properties

We stock one of the most comprehensive databases of bank owned properties and foreclosure listings available anywhere. Instead of searching high and low for bank home listings on your own, buyers and investors can simply search our database and view listings right in their area within minutes. One of the main reasons more buyers don't take advantage of these discount homes is because it's just not possible to find bank owned properties for sale through the usual sources. Agents don't carry them, and they're rarely advertised. We tap our industry contacts across the country to get the best listings as soon as they're available. There's no easier or more effective way to save time and target the homes you want right from the start.

What about Financing?

Buying a Bank Owned Home for Sale

Like other real estate purchases, an important part of buying a foreclosure is to secure financing. It's always best to secure financing before you start pursuing any properties. After you've browsed some listings and decided that buying a foreclosure is for you, getting financed should be your first step in the foreclosure purchase process.

Start by approaching your local bank and seeing what kinds of mortgages they have to offer. You'll want to decide between Fixed Rate loans and Adjustable Rate Loans, and you'll want to choose the right term length, and different options for these decisions will come with different interest rates. Generally, fed rate loans offer stable, sure payments over a long period of time, but come with high down payment requirements and higher interest rates. Shorter term loans will require less money up front and lower initial interest rates, but if the loan is an Adjustable Rate Mortgage, be careful. This means your interest rate can change from month to month, and for many buyers, this kind of unpredictability can be hard to budget and keep up with.

Choosing the Right Loan

Chances are, if you're looking at flipping your bank owned home purchases soon after you buy it for a profit, a shorter term, and possibly adjustable rate mortgage could be the best option. You won't pay much up front, which means you'll invest less overhead in your purchase before you sell it. If you're a buyer looking for a home of your own, or you're looking to rent out your investment and let it generate growing value over the long term, a stable fixed rate mortgage is probably best for you. The best advice is to talk to a loan officer and discuss the options. Playing it safe is best with financing. Also, be sure to compare offers from different banks. See what's out there before you make up your mind! The type of loan you choose and its cost will have a bigger impact on what you buy than you might think.

Choosing the Right Home

Once you've secured your financing and you know how much you have to spend, it's time to start targeting the homes you want to buy. With BankForeclosuresSale.com, narrowing down properties is simple and fast. Instead of spending times visiting properties that won't end up meeting your standards, our bank owned property listings allow you to get all the details about each property we list without even leaving your home. You'll find home specifications, information on price, photographs of the property, and even extras like the ability to get neighborhood profiles. We also provide accurate contact information, so that once you've found a few listings that catch your eye, you can easily get in touch with a property trustee and schedule a viewing to get a closer look at the property. But try to rule out property listings from the start. We have thousands of listings, and more are updated daily, so feel free to be picky. A property should be big enough for your needs, be in the location you want (location has just as much to do with investment value as price!), and have the amenities you're looking for.

Inspect the Property

Once you've settled on a property, it's time to contact the lender and schedule a viewing. Now, many buyers choose to bring along a home inspector, as well as a contractor, to help them inspect a home. Inspectors are professionals who know what to look for, and can often find problems you might not be aware of. Contractors are handy because they can make estimates on any repairs the property might need. Problems with the property and repair costs all affect a home's value. If a home has a lot of problems, you may want to pursue something else. But above all, be sure to keep a running tab of the costs of fixing any problems the inspection turns up. If you stand to save 30% on the purchase of a property, but you sink 25% of the property's value on fixing it up, that's only a 5% overall savings. There are better deals out there than that!

Title Search

The title search is just as important as the home inspection when it comes to buying bank owned foreclosures. A title search has to be done by a title search professional, usually an attorney, but this is a small price to pay for peace of mind. A title search will turn up any additional liens that may be held against a property, and is the key. Buying a home with other debts held against it means that you will become responsible for those debts upon purchase. It's very important for a home to be free and clear of any liens or debts, so that these don't cut into the money you save on home purchase. The title search often serves as one of the last checks buyers perform on a property before they fully commit to buy, so you shouldn't have to perform a title search unless you're quite certain that this is a property you're going to pursue. Again, the small cost for a good title search can end up saving you thousands, and provide priceless peace of mind when it comes to the negotiation process.

Closing the Deal

Once you've performed the home inspection, the title search, and you're ready to make an offer on an REO home, it's time to start negotiating. Closing the deal doesn't just mean paying whatever the suggested price is for the home. It means using the information you've learned from your research of the home to get the best deal possible. Factor in any costs associated with the property, such as repairs or upkeep, and let the bank know that you're aware of the value of these costs. It's always very important to document the reasons you want to pay a lower price, because it will be more convincing for the bank. You should always be ready to negotiate things like closing costs as well, because often you can get discounts on associated costs like this. Remember, banks aren't in business to sell real estate! You're dealing with a seller who's looking to get rid of this property so that they can get back the money the lost on the loan. Don't ever pay more than you want to, or than you're willing to spend. And always be mindful of the property's market value! Knowing how much the home is worth on the open market will allow you to keep track of how far below market price your offer is. Don't cut your margins too thin, or you won't get the best deal.

The Bottom Line

Investing in bank owned property is one of the smartest and most lucrative real estate investments available to public buyers. They can be fantastic deals, but it's important to make sure you have the information necessary to identify the best deals, and deals that are just ok, and even the deals that are downright bad! BankForeclosuresSale.com can help. We don't just provide listings, we provide valuable tips and information to help independent buyers like you find the best deals on REO properties and save money on new homes, rental investments, or cheap properties to flip for a profit! Explore our site today, and find out how you can cash in and start investing in real estate for savings and profit.

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