- Here’s An Opinion On:
- Real Estate Bald Hills
By Simon Volkov
Bank owned property refers to real estate that has been repossessed by lenders due to loan default. Bank repossessions can include residential homes, commercial properties, industrial parks, and undeveloped land parcels.
Buying bank owned property can be a tedious process because the sale is overseen by the lender. Since banks typically price foreclosure property below market value it is not uncommon for multiple buyers to submit purchase offers.
Lenders often reject purchase offers that are equal to or less than the asking price. In fact, many lenders reject offers that are higher than the asking price.
The process for buying bank foreclosures varies by lender and location. For example, buying real estate owned by banks in California can be much more challenging than buying houses in Nevada. The reason being is California is currently experiencing a housing inventory shortage because banks are not releasing properties onto the market.
According to industry expert, DataQuick, approximately half of the real estate sold in Nevada is purchased by private investors. Of those buyers, nearly half purchased properties with cash. In California banks reject more offers than they accept, even when cash offers are presented.
Buyers interested in purchasing distressed properties often find it easier to work with local realtors who are familiar with bank practices. Attempting to go it alone can slow down the process of locating properties and submitting offers that will be accepted.
While buying bank foreclosures can present challenges the process can be worth the effort in savings. The average savings hovers around 20-percent below market value. However, these properties often require repairs because evicted homeowners could not afford basic maintenance, let alone major renovations.
Buyers should obtain property appraisals and inspections to effectively calculate the true cost of the home. Sadly, it is not uncommon for previous property owners to inflict damage on the property. Nor, it is uncommon for vandals to cause property damage when homes sit vacant for long periods of time.
Bank owned properties are sold in ‘as-is’ condition so buyers should obtain repair cost estimates and carefully review disclosure statements. In rare instances, banks will reduce the asking price if major defects are discovered during the inspection process.
One alternative for buying bank owned homes is Fannie Mae Homepath program. Homepath is a government sponsored program focused on liquidating residential properties financed through Fannie Mae. Many properties are priced well below market value with prices starting as low as $5,000 in some areas.
Buyers can apply for financing through Home Path Mortgage. Fannie Mae properties that require renovation may qualify for additional funds to cover repair costs. Additionally, several of these properties are located in areas with high rates of foreclosure and may qualify for government grants offered through HUDs Neighborhood Stabilization Program.
Recipients must use NSP grant funds to rehabilitate the property. Grants are offered to individual buyers and real estate investors. Qualified applicants can receive up to 20-percent of the purchase price in grant money that does not have to be repaid.
A lesser known way to buy bank owned property is to seek out investors who specialize in wholesaling real estate. Wholesalers purchase bank portfolios consisting of multiple properties. Buying in bulk allows them to purchase homes at wholesale prices. Wholesalers often buy houses at upwards of 70-percent savings and can pass along discounts to individual buyers.
Buyers who take time to research available options for buying bank owned property can save time, money, and frustration. Working with realty professionals can help expedite the process and minimize risks.
About the Author: Real estate investor, Simon Volkov shares insider-secrets for buying bank owned property, along with tips for working with bank loss mitigators and applying for NSP grants. He has published an extensive real estate investing and home buying article library at SimonVolkov.com.
Source: isnare.com
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