Buying bank-owned foreclosures requires a lot of preparation, guts, and patience. It is also fraught with risk, especially after the auto signature scandal perpetrated by some of America’s largest banks. Also, there are hidden links and judgments if buyers are not too careful with their purchases.
But homebuyers are still flocking to bank foreclosures and other distressed properties for sale, some real estate agents say. Buyers, whether they are end-users or investors, start their search with foreclosure listings hoping they can find a bargain, if any.
The allure of foreclosed properties
Not all distressed properties are sold at bargain prices. Some may even sell for more than their market value, as some of the sellers on bank-owned foreclosures want to raise enough money to cover outstanding mortgages plus taxes and other fees. Buyers must also take into account the cost of repairing or even overhauling the property.
But part of the thrill of buying foreclosed properties is in the act of sifting through the rubble and pulling out the diamond in the rough. Some who buy properties like these for resale find satisfaction in getting a good deal on something that may not even come along in good times. If luck is on the buyers side, luxury or mid-market properties, such as two-bedroom condos in the city center, can become a bargain, as they would not have been available and sold at prices inflated during a market boom.
The key to finding that diamond is timing and knowing which places have been hit hard by the housing crisis.
the art of negotiating
It’s also possible to get bank-owned foreclosure discounts, with the help of real estate agents who have experience buying distressed properties. Buyers with cash also have a lot of wiggle room in terms of getting a good price on their intended purchase, given that some foreclosures may not even qualify for loans or banks may have hardened their loans.
If bank-owned foreclosures don’t sell at auction, these properties usually go back to the lender. That’s the perfect opportunity for buyers to aggressively negotiate with sellers. They should keep in mind that the banks do not want to keep these non-performing assets forever and want to liquidate them as soon as possible.
And some buyers find that the pleasure of driving and dealing with sellers and getting a good deal is enough to make up for all the hard work they’ve put into searching for the perfect home among the bank foreclosures on the market.
