Bank Property – Guide to Buying Discounted Real Estate
Owning a bank is a great way to buy real estate at discounted prices. Bank foreclosures consist of residential homes, commercial properties, and vacant lots. Whether you are looking for a first home, vacation home, investment property, or commercial property, bank properties can be the perfect solution.
To purchase a property from the bank, buyers must submit offers through the bank’s loss mitigation division or assigned real estate agents. When banks monitor multiple foreclosures, they often use local real estate agents to list and display properties and submit offers. Buyers should be aware that banks rarely deviate from the sale price unless major repairs are revealed during property inspections.
Banks often suffer a severe financial blow during the foreclosure process. The average loss per property in foreclosure is estimated at $ 60,000. The main objective of banks is to recoup most of the losses when selling repossessed properties. Buyers should plan to offer the full sale price or slightly less.
Most real estate foreclosures require repairs. This is particularly true in the case of residential homes. Unfortunately, homeowners in foreclosure often retaliate against lenders by causing property damage. It is not uncommon to find retired appliances; destroyed or defaced floors and walls; or broken windows and plumbing fixtures.
Real estate prices are based on current market value and are adjusted for necessary repairs. Buyers must do their due diligence in obtaining property appraisals and home inspections. Repairs discovered during the home inspection that were not recorded in the original documents can be used to negotiate the purchase price.
Bank properties are typically priced at least 10 percent below market value. However, there are options that allow buyers to get additional discounts. The first involves purchasing homes through Fannie Mae’s Home Path Mortgage program.
This government sponsored mortgage financing program offers a wide range of discounted foreclosure properties. Many of the homes for sale are located in areas that experience an above-average foreclosure rate and may qualify for Neighborhood Stabilization Program grants offered through HUD.
Fannie Mae established Home Path to liquidate its national inventory of bank foreclosures by offering special financing options. Home Path can be a good option for buyers with bad credit and for those who cannot afford the down payment requirements associated with conventional home loans.
Home Path requires a minimum 3 percent down payment and allows borrowers to obtain down payment assistance from outside sources; which is prohibited when obtaining financing through conventional lenders. Program details and foreclosed property listings are provided on HomePath.com.
Another way to buy bank properties at discount rates is by looking for real estate investors who buy bank portfolios. When investors buy foreclosed properties in bulk, they get wholesale prices that leave them room to make a profit while selling real estate below market value.
Last but not least, buyers should consider looking for a bank property that has been on the market for 60 days or more. Banks sometimes negotiate prices when real estate has stalled or when no one makes an offer.
Using grants in conjunction with Fannie Mae foreclosures or wholesale real estate can further maximize savings and return on investment. Those who take the time to research options and educate themselves on the process can potentially save more than 30 percent or more.
It is best to obtain information from renowned mortgage financers and government agencies or lawyers and real estate investors who specialize in buying and selling bank-owned foreclosure properties.