Home Repossession By Banks and Bank-Owned Foreclosure Properties
Foreclosures happen when a person violates the mortgage terms of a mortgaged property with a lending institution or a bank. The most common reason is the lack of ability to make regular payments for the mortgage. The mortgagor or bank can then redeem the mortgaged property. When it is foreclosed, it is then auctioned off but if there are no bidders, it will be regarded as a bank owned foreclosure property. The bank will then be the legal property owner and, since banks are not into the real estate business, it will be considered a non-performing asset for the bank. The bank being in the business of lending money and and NOT in managing real estate they would want to get back the capital they lent by selling this particular property at the earliest time possible. This would create great opportunities for prospective investors acquiring properties at a discounted price. The property may be sold for a fraction of its original price. Demand for housing grows relative to population growth, therefore, real estate can be a reliable and tangible form of investment.
Why Banks Are Motivated To Sell Their Foreclosed Properties: Banks sell their bank foreclosure properties mainly because they are into money business, therefore, non-performing assets such as foreclosed homes give them no return on their money. Getting their capital back is their main objective which is the reason investors have a good bargaining advantage. Good terms and conditions may be agreed upon between the bank and investor/buyer. Property taxes and maintenance expenses of the foreclosed property are additional burdens to the banks. In addition, the risk of property damage incurred when the property is left vacant without persons to look after it is also reason they want to sell quickly.
Advantages Of Buying Bank Foreclosures:
Low Prices: Banks normally do not want to lose money but they prefer to sell fast so investors can get advantaged prices which can be more to their favor. Some may think that the properties are in a state of disrepair or totally damaged, but the fact is that many properties are in extremely good condition.
Clean Titles: Prospective real estate investors can have several advantages if they acquire bank foreclosure properties. These usually have clean titles with no liens and encumbrances against the property except only with the bank which makes paperwork easy to process. Usually banks have several foreclosed properties at their disposal and a good research at their database will give prospectors a wide variety of choice. Banks also treat most bank foreclosures as standard house loans making them more attractive to investors.
Favorable Terms: With the main objective of acquiring back lent capital tied up in the non-performing assets, the bank may exercise their flexibility to terms and conditions which can be favorable to the prospective investors.
Advantages Of Buying Bank Foreclosures: Since bank foreclosures are so attractive to investors, a property may have many buyers interested in purchasing it, and therefore there may be competition in acquiring the property.
Buying The Foreclosure: Having clean titles and with fewer problems related to the property that may be encountered in the future, the properties may attract lots of prospectors that may push up the price of the property. So many prospective buyers also may be to one’s disadvantage but these can be resolved by establishing good relationship with lending banks. Banks with plenty of available foreclosed properties have database available for everyone who are interested.