Buying Home Foreclosures

By Sheryl Landrum
Mortgage Credit Problems Columnist

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Properties that have gone through foreclosure and are now REO (real estate owned) by the bank owned offer more than a few challenges for would be buyers hoping to get a great deal. What do you need to know when buying a property that has been foreclosed on by the bank?

When a mortgage foreclosure occurs and the bank takes ownership of the property, do your homework before making an offer. Bank owned properties are not always a great bargain. Homeowners going through a mortgage foreclosure often neglect, and sometimes will purposely harm, their homes leading to costly repairs. Before making an offer, make sure the home is valued comparably to other homes in the neighborhood and consider the costs, and time, involved in renovating it. Remember when buying a home that has been through foreclosure, the bank is looking to sell it "as is."

Be patient when dealing with foreclosure purchases. Many of the real estate professionals I work with complain about the lack of urgency and response time when dealing with a bank foreclosed property. Escrows usually do not close on time and offers and counter offers can take much longer than what is standard as banks do not operate in the evenings and on weekends.

If you think a home foreclosure is a great steal, think again. While late night television purports that you can get great deals when buying a bank foreclosure, most banks are not interested in dumping property and will sell their foreclosures at close to market value. Remember, banks answer to investors, shareholders, and auditors. Often an accepted offer may need corporate approval which can also delay the home buying process.

While buying bank foreclosures is not for everyone, hopefully this information will help you if you are considering buying one.

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