Are you a new investor? If so, you have probably taken the first
steps to being a good investor. Now you are ready to take the final
steps to finding property and investing. Bank owned foreclosure property
should be on the top of your list. This particular property is owned by
the bank and is sometime referred to as REOs (Real Estate Owned). There
are a lot of advantages to purchasing bank owned foreclosure properties,
and it seems that every investor wants to get a part of this market.
Think about investing in a property listing. This list will include
information regarding properties that a bank owned, the asking price of
the homes and other valuable information.
According to Investopedia, repossession of a home, is defined as �a
situation in which a homeowner is unable to make principal and/or
interest payments on his or her mortgage, so the lender, be it a bank or
building society, can take control and sell the property as stipulated
in the terms of the mortgage contract�. With our economy going the way
it is, this is becoming a reality for more and more people. For a
homeowner, this is a pretty scary word. But sometimes it can actually be
a blessing in disguise.
There are advantages and disadvantages to purchasing foreclosure bank
owned property.
The most obvious advantage is the asking price by the bank for the home.
The home will be marked substantially lower than market value. The bank
will consider removing some or all liens and fees on the bank
foreclosure real estate in order to get it on the real estate market and
resell it to the public. This does not necessarily mean the home is in
bad form or not worth investing in. It is marked down because the bank
wants to get rid of the property as quickly as possible through a quick
sale. The original owner�s unsuccessful attempt at a sell will not stop
the bank from trying to make an attempt to get the bank foreclosure real
estate sold. The bank asking price for the property will be
substantially below market value in order for this to happen. This is a
great opportunity for an investment and hopefully the investor can
resale the property and make double that amount in return.
However, there can be a substantial downfall to purchasing bank owned
foreclosure property.
Most individuals do not invest in anything without inspecting the item.
If you went to a store to purchase new clothes, even if the clothing is
on the clearance rack, you would inspect for flaws. Well, foreclosure
bank owned property is usually sold as is. Generally home owners whose
houses are going to be foreclosed most often are going through financial
crisis so it is better to give them the hopes of getting money the fast
way. One way will be to run advertisements like �houses bought for cash�
etc. They may have invested thousands of dollars into making the home
large by adding rooms or an extra bathroom and due to unseen situations
have now lost their home. If you do not have the opportunity to inspect
the property first any errors to the home will become your costly
expense. This is truly one great disadvantage. Some will go as far as
damaging the home or taking everything they have put into it out. New
sinks, ovens, ceiling fans, toilets and more. Its theirs and they want
it. This leaves the home with considerable damages, costly damages.
Some states entail the bank to give all buyers a disclosure with a
summarize discovery of property damage. Such as, damage to the roof,
plumbing issues or electric problems. This disclosure is valuable to
investors and home buyers alike. Talk about this option with the bank
that you are working with. If they are not lawfully required to offer
you with a disclosure ask if you are allowed to have the home examined
and how much time you have to do so. Some bank owned properties are not
available for inspections or your viewing. If this is the case it may be
wise to just drive around the neighborhood of where the property is
located. Talk to neighbors and get an idea about the people who once
lived there. You never know, someone may have seen the property before
repossession.
However, investing comes with its advantages and disadvantages. This is
a risk most investors are willing to take.
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