Bank Foreclosures and Working the Cycle

By: philip smith

To a buyer looking for the first time at the bank foreclosures for sale in his preferred location, it may appear that there is little price advantage. While it is true that in hot sellers' market conditions the banks expect to discount only for any significant repairs outstanding, in many cities large and small across the nation right now the market is definitely in favor of both the home buyer and the investor. And this means the buyer has a negotiating strength at its height; in traditional housing market and most certainly in REO property.

REO or real estate owned property includes many family homes where titles have passed back to banks, formerly the lenders, at the end of the process of foreclosure. In hot markets the bank owners compete with other sellers of family homes to find the most lucrative buyers among the many.

The manageable numbers of properties they hold in inventory sell at or near fair market value and only the houses in truly bad condition sit vacant for long periods. This fall, banks in many states face carrying costs on record high inventory levels over the winter months, a period when buyers hibernate. They must compete with large numbers of motivated sellers, in a market cold for more than one reason, for the attention of a few knowledgeable buyers and hard nosed investors. Expect a level of discounting to become the norm if it hasn't already, and be flexible with your location preference to increase your opportunity.

Remember the advantages of these properties versus buying at auction, or indeed in pre foreclosure. Title encumbrances of liens, including junior liens have been cleaned, and the property tax arrears paid. Most REO properties are listed with realtors, and with details freely available on online listings. They can be inspected before you decide to make an offer. The bank is responsible for evicting any tenants, legal or otherwise. The bank owner may have already completed some repairs. Expect to be able to negotiate around a discount for outstanding repairs and possible financing advantages. If you find that bank foreclosure home lacking only in curb appeal, and your pre-approved financing is already sound, then an unconditional offer will give you a gold ranking! Make the most of your success, this buyers' advantage will not last forever, what comes down will surely go back up again.

Foreclosures
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