9 Steps to Buying Bank Owned Foreclosure Bargains and Banking Huge Profits

There are three different ways to get involved in foreclosure investing and today I will cover buying a post auction property, also known as a bank-owned property. So below I have broken down purchasing bank owned foreclosures down into a 9 Step program.

Step 1: Get pre-approved for a mortgage and make sure you have your down payment money together.

Step 2: Use the internet or home magazines to find good deals, but the number one way is to find a real estate agent who specializes in bank-owned properties. They’ll have access to dozens or hundreds of bank-owned listings.

Step 3: Meet with the real estate agent and discuss your goals and begin viewing homes that meet your criteria.

Step 4: Find a property and have the agent submit an offer to the bank for your target bargain price.

Step 5: Agree to a price and sign the purchase contract.

Step 6: Have an appraisal performed to make sure the value is supported.

Step 7: Have the lender’s closing attorney do your research for you when they do a complete title search on the property so you know all existing liens and stakeholders for the property.

Step 8: Submit the title search information, appraisal and final documentation to your new lender and attend the closing.

Step 9: Move in and customize or renovate the home for yourself or find a tenant to rent the property out to.

Pros of Buying Bank-Owned Properties

 

  • Less stress because the bank has done the nitty-gritty work for you. No dealing with stressed out sellers or stuff like that.
  • The property is in better condition because the bank brought it up to sellable condition.
  • Banks are motivated to sell at a discount because they don’t want to be a property manager. You actually get to go inside the house and preview it and have it inspected.
  • All the liens and back taxes have been removed.
  • You can negotiate on rehab costs, interest, closing points, and loan amount instead of being locked horn to horn with a seller.

Cons of Buying Bank-Owned Properties

 

 

  • You’re dealing with a bank so they move at their own pace.
  • Banks want things done a certain way or they won’t accept your offer.
  • You probably won’t hit the super long homerun that you read about in all the real estate investing books. You’ll get a good deal, but probably not the steal of the century. Other than that there really aren’t that many negatives to buying a bank-owned property. The hard work has already been done for you in most cases.

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