Your #1 Source of Bank Foreclosures

Click on the map below to start your foreclosures search

Bank Foreclosures Decoded

Foreclosed real estate is called Real Estate Owned or Bank Foreclosure Real Estate and this property is owned by a bank after an unproductive auction. The bank aims to recover the default amount owed to it and hence the base amount required by the bank includes the outstanding amount of the loan, interest and any other fees applicable which rides up the price of the property even though its value has depreciated. A savvy investor will shy away from such a proposition immediately and the auction is likely to be unsuccessful.

However, since the bank wants to recover their outstanding dues, they will waive off any internal fees or liens on the property to make it an attractive proposition. The usual procedure is to re-auction or enlist the services of a realtor who specializes in bank foreclosures.

This market is very attractive to investors as the property may often be in a state of neglect but the price compensates for this loss as the bank is desperate to get rid of this depreciating asset and recover funds. A careful analysis here can generate high yields for investors and then yield can be derived by remodeling and renting or selling the property.

A good idea is to research online but also get hold of a real estate broker who specializes in bank foreclosure properties. This will ensure you get information in real time and can compare the market information with that online. The purchase of an online property listing will allow you access to millions of homes and you can re check the actual value on the open market with a smart realtor.

The primary advantage for venturing in bank foreclosed properties is the price which makes this proposition highly attractive to buyers. Or one may think that the property may be substantially worn out due to the low asking price. This may not be the case as the bank simply pushes the price well below market price so that they can dispose of the property as soon as possible and recover their funds.

The major issue with bank foreclosures is that you get to purchase the property as is and may not have the rights to visit and inspect. Where some states have instructed banks to provide a summary of property damages and the general fixtures and fittings or the condition of the house, this is a rare practice in most states. If the house was owned previously by an owner who had invested money in the house, he or she will attempt to take out anything of value from the home before it is repossessed.

This essentially means that you could end up with a home with large gaping holes instead of light fixtures, a hot water geyser, and a stove! Any damage to the home like roof, plumbing or electrical cabling, if not reported earlier in the due disclosure by the bank will prove to be an expensive cost item on your home buying budget. It is best to discuss this important issue with the bank and get a fully documented summary of any major damages to the property which may make you reconsider the option on offer. Further, drive around the neighborhood for external inspection or ask the neighbors if they have been inside the property and what it is like, find technicians in the area who may have a work history at the house.

In all, every investment comes with a risk – but bank foreclosure real estate is one risk that most of the savvy investors are willing to take because of the high yield.