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What are Bank Foreclosures?

Bank foreclosures are properties that have been put up for sale because the previous homeowner defaulted on a home mortgage loan provided by a lending bank. When a homeowner defaults, a bank will pursue the right to sell the property as means of getting back their money. Bank foreclosures are usually scheduled for sale at public auction. If they don't sell for a minimum bid amount, then the bank retains control of the property to sell as a bank-owned home or an REO property. Bank foreclosure offer some of the lowest prices available on real estate anywhere, and are very popular among homebuyers and real estate investors alike.

How to Buy Bank Foreclosures

The first step in buying bank foreclosures is locating properties for sale in your area. Listings can be hard to come by just by digging through newspapers or calling city hall, so the best way to find them is through an online foreclosure listings service. These services not only bring hundreds or thousands of local listings to your fingertips in seconds, they provide all the necessary details about properties you need to narrow down your search right away, instead of spending time visiting properties that don't fit your needs. Once you've got your hands on some listings you know are up your alley, visit them in person for a cursory look. If it seems like a property you'd want to pursue, you're ready to start investigating more thoroughly.

The Title Search

Once you've found a few listings that interest you, the next step is to perform a title search. A local lawyer or real estate agent can help you with this, but you can also contact City or County officials. Title searches will reveal is the foreclosure home has any additional debts held against it besides the defaulted mortgage, including government tax debts or additional loans. This can be very important, because if you buy a bank foreclosure home with additional liens against it, you could become responsible for paying them off.

The Inspection

Just like the title search, an inspection of the property is an important part in making sure the property won't end up costing you more than just what you pay for it. You can arrange an inspection by contacting the trustee of the sale or the lender. Foreclosure listings come with contact information for the property, and they're usually more than willing to help. Watch for signs of damage or anything that could affect the property's value during your inspection. It's also a good idea to have a contractor come along with you to make estimates on repairs, as those kinds of costs should figure into what you're willing to pay for the foreclosure. If you can, hire a professional home inspector. This isn't always necessary, and sometimes time concerns make it difficult, but it's always helpful to know if a property is up to code or will need improvements, especially if you're buying a commercial property.

Get an Appraisal Valuation

It's very important to also arrange for an independent appraiser to assess the market value of the property you're looking at buying. Getting an accurate read on what the property is actually worth is the key to deciding your bid at auction or your offer to the bank. Bank foreclosures can often be purchases for 10% to 50% off their actual value, but the key is to know how much a home is worth and not overpay! Appraisals are of the utmost importance in valuing a bank foreclosure property of any kind.

Secure Financing

Before you start bidding on homes or making offers, you need to get your financing in order. Securing pre-approval for a loan let's you know how much you have to work with, and can be another big factor in deciding how much you're willing to spend on a given property.

Make an Offer

Once you've secured your financing and assessed all potential costs of the property, you're ready to make an offer. A good rule of thumb is to subtract any potential costs of repairs or other expenses from the appraised value of the property. You'll want your offer to the bank to be significantly lower than that figure, to ensure good savings and a good purchase value. In most cases, banks are just trying to get these properties off their hands, and you can get fantastic values when you buy. Try to maximize the value of your purchase. The more you save now, the more you make on appreciation value and future sales!

The Benefits of Buying Bank Foreclosures

Bank foreclosures offer some of the best prices available on real estate today. Since the bank is just looking to collect enough to pay off the remaining unpaid debt owed on a home mortgage, they can get away with selling properties for way less than they're worth. Savings of 20% and 30% can mean the world to homebuyers looking to save money on their first home, but they can also mean a huge margin of profit for real estate investors. There's just no better way to ensure value on a real estate purchase than a bank foreclosure.

Earning Value without Risk

When you buy a foreclosure for below it's market value, you're getting instant equity in your purchase! You could turn around and sell it for market price, and profit instantly, and many people do. But the additional benefit is to hang on to the property and watch the value of your investment grow. Foreclosures are easy to manage, because the lower price on the home means a lower mortgage cost for you, and no losses if the value of the home drops due to market conditions. You can even put your property to work for you by renting it and increase your margins of profit on tenants. The potentials for value are huge, especially if you buy in an up and coming neighborhood with potential for property value increases.

Bank foreclosures can help make buying the home you want for a price that works for you possible. Earn great savings and protect yourself against risk in the future by making a winning investment in a property that will increase your wealth! Check out bank foreclosures in your area before you buy your next home.

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California Nevada Oregon Washington Idaho Montana Wyoming Utah Arizona New Mexico North Dakota South Dakota Colorado Minnesota Hawaii Alaska Maine New Hampshire Vermont Massachusetts Rhode Island Connecticut New York Pennsylvania New Jersey Delaware Maryland Washington DC Virginia West Virginia Ohio North Carolina South Carolina Georgia Florida Kentucky Tennessee Indiana Michigan Wisconsin Nebraska Illinois Iowa Alabama Mississippi Kansas Missouri Arkansas Louisiana Oklahoma Texas