Lately, <strong>bank owned properties</strong> have become very popular among investors since the homes that are being sold at public auctions are on negative equity, meaning their worth has been overtaken by the outstanding debt owed to the bank. The opening bid for these homes are typically pegged on the unpaid portion of the loan, including interest charges and other fees related to the foreclosure process.
Investors find that the prices of these same properties that were auctioned off unsuccessfully would go down significantly once they revert to banks to become real estate owned or <strong>bank owned properties</strong>. Banks usually follow the same path in trying to sell of their inventory of foreclosures. They will usually extinguish the encumbrances attached to the title, such as liens or back taxes, to bring down the resale value of the property. Banks will then attempt to resell the home either through their own auction or by listing them in various types of foreclosure resources.
With the millions of bank foreclosures for sale across the country, banks are aware that they need to go the extra mile in order to attract buyers. Since banks are not actually in the business of selling real estate, they would like to be rid of these properties in the soonest time possible. This gives buyers the advantage of pushing their requests at the negotiation table. Buyers can haggle for discounts and other concessions. A common practice would be to obtain their loan pre-approval from the same bank they are buying the home from. Some banks would even be willing to waive the closing costs or undertake some of the restoration work in order to sell a property.
<em>What to Watch Out For</em>
A thing that buyers would have to ensure is that the <strong>bank owned properties</strong> they are planning to purchase is not the subject of a court case. In recent times, the government has cracked down on banks exercising poor foreclosure practices, such as the infamous robo-signing scandal where homes get foreclosed without proper documentation. Home owners have started fighting the foreclosure proceedings initiated by banks on their homes. Some banks have already received sanctions for these poor practices.
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