Buying bank owned real estate is quickly moving to the forefront of homes sold within the U.S. While this strategy allows buyers to purchase properties below market value, it is important to calculate the true cost of the property. Most bank foreclosures require repair work and buyers may need to take out a high-interest construction loan to cover the costs.
Buying bank owned real estate can be a good choice for first time home buyers, as long as they engage in due diligence. Bank foreclosures are also attractive to real estate investors; particularly those who use the property for rental income.
Bank foreclosures encompass all types of real estate including residential homes, commercial real estate, and undeveloped land. Properties are listed at bank websites and through realtor foreclosure lists and sold through the lender?s loss mitigation division or an assigned realtor.
Buying real estate foreclosure property isn?t much different than buying a home through a private seller. The primary difference is buyers negotiate the purchase price with the bank instead of the homeowner.
Banks are less willing to reduce the asking price because properties are already priced below market value. Buyers must obtain preapproved financing prior to submitting their offer. There is a strong possibility that other people will be submitting offers on the property, so buyers should be prepared to offer the full asking price.
Bank owned real estate is comprised of properties which did not sell through foreclosure auctions. Once real estate is returned to the lender they undergo the process of removing any creditor liens and judgments in order to sell the property with a clean title.
Although bank owned properties are priced higher than foreclosures sold through public auctions, all the time-consuming and costly duties have been taken care of. Buyers can close on the home and quickly take possession.
Bank owned foreclosure homes are sold in as-is condition and buyers are responsible for required repairs. If banks engaged in any repairs or renovations, the work is not guaranteed and replacement products are not under warranty.
Many buyers are turning to Fannie Mae?s Home Path Mortgage program to buy bank owned real estate. This program offers flexible financing terms and a low down payment requirement of 3-percent. Additionally, buyers can obtain down payment assistance which is prohibited with conventional mortgage loans. Considering most lenders require a 20-percent down payment, this option can be advantageous for first time home buyers and real estate investors.
Individuals interested in buying Fannie Mae bank foreclosures should also investigate HUDs Neighborhood Stabilization Program to determine if they qualify for grant funds. NSP grants are available to individual buyers and investors who purchase real estate in areas that have a high foreclosure rate.
Buyers who take time to research available home buying options can save time and money, and obtain instant home equity. Although bank foreclosures generally require extra care, they can make exceptional personal residences and investment properties.
By: Simon Volkov
Posted:
Source: http://www.cochlearprojects.com/2011/07/benefits-of-buying-bank-owned-real-estate/
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