For investors and homebuyers looking to purchase a bank-owned property there are a large number of bank-owned foreclosures on the market nationwide so, there has never been a better time to purchase bank own real estate.
There are usually a few stages at which you can buy a foreclosure property. Investors and homebuyers can purchase a foreclosure property in the first phase of default, before a property goes to auction. Secondly, investors can purchase a property at the public foreclosure auction. And finally, a foreclosure property can be purchased from the bank or lending institution if no one bids at the public sale and the bank repossesses the property.
Once a property is repossessed by a bank or lender, the property is usually listed for sale through a real estate agent. Good properties are available, but they require research, preparation, patience and persistence. Buying a bank-owned home in foreclosure isn't easy, and without risk. Before you consider plunging into the foreclosure market, be sure to do your research.
The following is a list of things you can do to successfully purchase a Bank own Property.
1. Inspect Property.
Most Bank Owned Properties are referred to as "distressed" properties and are sold "as is," with disclosure which means that the 15-20 percent discount you saved on the purchase price can easily be eaten up by unexpected (unforeseen) expenses - such as repairs not noted in the exterior inspection. Sometimes owners of homes that go into foreclosure have been struggling financially, which means that the house usually has not received needed repairs or general maintenance on a regular basis. Some homeowners who lose their property to a lender frequently damages to the property. So, be prepared to do renovations and repairs. Hire a licensed contractor to inspector inspected the property and to give you a written estimate of the cost to repairs the property. Budget that number into your purchase price. Repair costs should be used in your negotiation with the bank to reduce the asking price. However, Banks are aware of the needed repairs to the property and set their asking price according.
2. Title Search.
Once a home has been located, search the public records for liens and outstanding taxes. However closing attorney who is handling the closing will do a full title search on yours and the Banking before you can close on the sale of the property. Liens on the property can drive up the purchase price, because they have to be paid off before the property can close. Liens typically placed on a property for unpaid loans borrowed against the property, property taxes or unpaid contractors (mechanics liens). These liens remain intact until they are paid, which means that you may have to pay off the liens on the foreclosed property you are buying - even though you're not the one who didn't pay the property taxes. Banks should clear the title before selling but never assume this is the case - just as you would if you were buying a property from anyone else.
3. Negotiate.
Investors should be prepared to negotiate a lower price than the asking price, lower down payment, a lower interest rate, a reduction in closing costs and ask the Bank to pay all or some of the closing costs. Many mortgage lenders may be willing to waive some closing costs, maybe even offer a break on the interest rate or the down payment. Moreover, some lenders might offer to finance the property at a below-market rate or with a lower-than-usual down payment. Always try to get a better price and favorable terms.
4. The Offer.
Although most banks want to unload their foreclosed properties, they won't necessarily do so cheaply. So you aren't guaranteed a fabulous price. But remember you're dealing with an eager seller. The bank's REO manager or listing agent might suggest that the list price is "firm," but never be afraid to negotiate lower price especially in cases were the property need repairs.
5. Financing.
With good credit, many banks will loan the full amount on a foreclosure or other property. However, if the property is going to me an investment property (rental property) the banks usually require a 10 percent down payment. Investors with a large amount of equity in another property may get a line of credit from their bank to purchase a foreclosure. When they convert the line of credit to a mortgage, a down payment may not be required.
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