The Pros & Cons of Bank Owned Foreclosures ? Real Estate ...

The Pros & Cons of Bank Owned Foreclosures

We have all heard of the great deals to be had in bank owned foreclosures. The recent housing downturn which has resulted in record numbers of foreclosures across the US has meant banks and mortgage lenders being weighed down under mounting properties that they have had to take over. Banks and mortgage lenders do not want these properties on their books. Not only do these bank owned foreclosures represent large amounts of capital invested which desperately needs to be retrieved and reinvested but also represent huge liabilities. Bank owned foreclosures not only present banks with risky liabilities that have the possibility of losing value or being damaged, but also mean ongoing holding costs to protect their already bad investments. This means that holders of REOs (real estate owned) and bank owned foreclosures urgently need to sell these properties even if that means selling them far below current market value and what was originally loaned on them.

So yes there are great bargains to be found among bank owned foreclosures but you need to carefully weigh the pros and cons of each property before jumping in head first.

Some of the cons of purchasing bank owned foreclosures include:

* Poor property condition ? some bank owned foreclosures are in poor condition, either because they were abandoned, vandalized or because previous occupants stripped the home. * Disclosures ? as the holders of these properties never lived in them they are not aware of defects and cannot provide disclosure of them. * Buying process ? the process of buying bank owned foreclosures is greatly controlled by the bank and is a little more rigid than when purchasing from another homeowner.

Pros of buying bank owned foreclosures:

* Title ? the bank or mortgage lender offering the property will ensure clear title is given. * Reputable seller ? when bank owned foreclosures you will have the confidence of dealing with a reputable seller who is not going to trick you out of your deposit money. * Discounts ? bank owned foreclosures are often sold a large discounts, often in the range of 40-60% below market value.

While bank owned foreclosures present great investment opportunities for both families looking for new homes and professional real estate investors, this does not necessarily mean they should be purchased without thought and guidance. The bank will certainly have their own representation so it is crucial to retain a knowledgeable professional to represent your interest also and guide you though the transaction.

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Source: http://rawbusinesslaw.com/2012/06/29/the-pros-cons-of-bank-owned-foreclosures-real-estate-foreclosures-5/

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