Bargaining on Bank Foreclosures to Yield the Best Deals

by : philip smith

Bank foreclosures get their name because the bank lender with a defaulted loan has, at the end of the foreclosure process, ended up with title to the property. Banks, along with other lenders this year, find themselves as managers of an increasing inventory of REO or Real Estate Owned property. These repossessed properties must be offered for sale as soon as possible in order to avoid a range of problems from security factors to the sheer holding cost of deteriorating assets These properties, which cover the spectrum of real estate assets from commercial to residential, from vacant lots to former speculator and investor assets are now flooding onto a cold sellers market in competition with similar properties, some with owners facing financial pressure to sell, others in pre foreclosure.

Some real estate investors and a few knowledgeable home buyers see the current market as the best opportunity in years to buy well. The home buyer's intention is to stay put for a while. Buying to hold while housing prices correct themselves is likely to mean staying in your home for anywhere between 3 and 7 years depending on the state, county and metro location. Buying a bank foreclosure is one way the home buyer gets a double benefit from a down market - the benefit of buying now at a discounted price, then building equity in the home faster as he rides out the market bottom and prices rise once more.

So, are bank foreclosures a good deal? Property selected carefully with attention to the very specific factors contributing to that deal, has the potential to yield more space for your investment dollar, or a move up into a more prosperous neighborhood, or simply affordability. Specific factors are the 'as is' nature of the property offered by the bank, the likelihood that the property has been in the foreclosure process and then in the bank's hands for a while, the bank's pricing policy and attitude to conditional offers. Most bank owned property is offered for sale through agents, the bid and counter offer process can be protracted, and vendor financing, rarely possible, is a completely arms length affair. Having said all that, watch this space; as the year wears on there can be no doubt that bank inventories of repossessed homes will rise to record levels in some foreclosure stricken states; bulk REO auction sales, aggressive marketing, enticements and deeper discounts will be required to move those bank foreclosures off the bankers' hands. It's always going to be up to the potential buyer to do the due diligence, researching the condition of the property before making your offer is vital to ensure you get the bargain you intend.