Bank foreclosure property, which is also called real estate foreclosure property, is property that homeowners were not able to make the mortgage payments on. The reason a bank is able to take the home from the borrower is that the property was the collateral for the borrower in order to secure his mortgage. The borrower’s failure to pay the mortgage gives the bank the right to file a lien on the property and repossess it for non-payment.
Buying a bank foreclosure property in pre foreclosure
Foreclosure is not a quick process so investors should realize that the best time to act to buy a bank foreclosure property is between when the notice of default is filed and the foreclosure process becomes official. This is called the pre foreclosure period.
This is the time period where homeowners can try to sell the home to avoid having a bank foreclosure on their credit. This is the best time for real estate investors to act because the homeowners have a limited time frame in which to sell the home so you can usually get the property for a low price.
Properties that the homeowner cannot sell in the pre foreclosure period become a bank foreclosure property when the bank takes possession of the home and the property title.
The bank does not want bank foreclosure properties
Banks do not want to hang onto the bank foreclosed properties for a variety of reasons including the following:
- The banks are in business to make money, not to manage property.
- It does not look good for the banks when they own many bank foreclosures because it does not show good decision making with regard to lending.
- It costs banks a lot of money to own the bank foreclosure properties. They have to pay for maintenance, pay taxes and carry insurance on the property. Every day that banks own foreclosures, they are losing money.
- The banks want to sell the foreclosed properties so they can recoup some of their losses.
Bank foreclosed properties can be a bargain
Banks are anxious to be rid of the foreclosure properties so they will sell them as quickly as they can and for a reasonable price. Thus, a bank foreclosure property makes a great investment. Most bank foreclosed properties sell for anywhere from 20% to 60% less than their actual market value.
If investors know what they are doing, they will be able to find a great bank foreclosed property for a price they can afford. You can find many bank foreclosure listings by searching on the Internet and other resources.
You cannot go wrong when you get involved in real estate investing by buying a bank foreclosure property because the properties are affordable and free of all liens and other claims. As an investor, your only cost is what you pay for the property.