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Buy Bank Foreclosure Listing

At some point, real estate investors who are sitting on the sidelines will decide that enough is enough and begin looking at these bargain prices and look for foreclosure listings.

Are you there yet?

Before jumping on the foreclosure investing train considers a few items. Let’s take a look at the benefits first.

You can buy homes from the owner prior the ending of the foreclosure. This stage is called pre-foreclosure. Chris Tunnessen at Foreclosure.com writes, “During this time, the property still belongs to the homeowner, but the lender has initiated foreclosure procedures because payments have not been made and the loan is considered to be in default.

This is a critical time for not only the homeowner, but the lender as well. More important, it represents a tremendous opportunity for you to make money.”

The next stage is when the bank has completed the foreclosure process and owns the property. With a righteous foreclosure list you can get huge bang for the buck at this stage. The reason is simple. Most banks do not want to foreclose on a home. It is an expensive and lengthy process. Once they do complete the process, they want to get rid of their bank foreclosure listings quickly by dropping the price for a quick sale.

A friend of mine bought two of these properties in lovely and expensive Orange County, California, both for about 25 % below the market value. When he sold these properties a few years later, he made more money than people will see working ten years.

But there were problems which brings us to the disadvantages.

The biggest one is that you may have to buy the property “as is.” In many cases as it was in my friend’s case, there are undisclosed and sometimes hidden problems.

People tend to get real upset when they lose their pride and joy, their piece of American Dream, their home to a bank. In these emotional states homeowners of foreclosed properties can take what they consider to be their belongings. And they may go to the extremes.

You need a good inspector on your side who can do more than a shallow survey of the property. This is extremely important especially when you consider the next point.

In some states, it is the law that sellers prepare and provide a Residential Property Disclosure to all buyers. This disclosure brings everything to light so that you know what you are getting in to and if they do not disclose something, you have recourses for the potential damages.

In some states corporately owned homes such as bank foreclosure listings may not be required to have an accompanying property disclosure. So it is up to you to take an expert with you who knows how to find out about hidden and undisclosed problems.

Also the bank more than likely wants to sell the property “as is.” So don’t count on them making any repairs and find out what the total cost of the repairs are before you commit yourself.

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