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Home > Bank Foreclosure > Inside Bank Foreclosures > Bank Foreclosure - Investing Overview Bank Foreclosure - Investing Overview Purchasing directly from the bank is the most popular way to buy foreclosures.
It's fairly easy, and less of a headache than other investing methods because it involves less complications and risks.
Locate bank or government owned properties in the newspapers or by researching them at the county courthouse.
You can also contact a realtor, or use a good listing service.
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Decide for yourself.
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Find properties that meet your investing criteria, those that are in your area, price range, size and style.
Determine whether you are buying to resell or to secure a residence for yourself.
Determine if the property is a bargain by deducting the lender's asking price from the average market price of very similar properties in the immediate area.
Your goal as an investor is to realize a tidy profit.
You can buy property at a 15%-20% discount and earn a 35%-40% return.
As a home buyer, you want to buy below market value with a low down payment, low interest rate and reduced closing costs.
Contact the lender or the broker and meet him at the property so you can inspect it.
Record any damages and deduct the repair estimates from your price.
Use a good property inspection checklist.
Investors must deduct all expenses associated with buying, repairing, borrowing, holding and closing again, from the price they think they can get.
Homebuyers should negotiate around the four discount factors:
price, down payment, interest rate and closing costs.
The bank, being a lender, can negotiate all these items.
If you still like the numbers and the property, proceed with a written offer containing the following:
A statement indicating your intent to purchase the real estate.
The physical address of the property.
The legal description of the property.
Your price.
Your down payment terms.
Your financing terms.
Your desired closing date.
Any contingencies.
Your deposit information.
Your name, address and phone number.
Depending on the property and several other variables, you may want to buy a property at 15%-25% below market value.
Start your offers accordingly.
Unrealistic offers will be rejected quickly.
Learn to work with the banks.
You can negotiate around interest rates, price, down payment, whatever, just stay within reasonable boundaries if you want to succeed.
Some lenders sell thousands of REO's every year.
Many sell their properties at or near market price.
We know one lender who has sold almost 10,000 properties in the last 3 years, with average sales of 99% of market value.
Not all lenders behave the same way.
Try to locate those that are more flexible in their property disposition policies.
When the bank accepts your offer, close as quickly as possible.
Avoid delays and complications from competitive offers.
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