How to buy a house owned by a bank

Buying a bank-owned home can be a great opportunity, especially since these properties are often priced below market value. Most of the time, banks just want to get rid of these properties so they can recover their lost money and get back in business. Banks are not in the real estate business; therefore, they only want to liquidate bad assets and cover the expenses incurred on a particular property. Therefore, recognizing this opportunity allows a real estate investor to buy a house at a really low price and then sell it for a higher profit.

Buying a bank-owned home can be a bit tricky, especially for the inexperienced. Here are 5 simple steps on how to make it quick and easy.

· Research and get a list of all bank properties that are for sale. A bank may advertise an offer for a repossessed property. In some cases, banks may also simply list a property for sale through a real estate agent. Research these properties. Try to get the bank number so you can call the bank officer in charge. If you’re interested in a particular property, find out as much as you can about it. Banks do not give much information about a property since they do not usually do an eye inspection. So it would be a good idea if you can find a way to verify the property for yourself before you decide to make an offer. Find out the history of the house if you can, like its previous owners and why the bank already owns the place.

· be ready with cash. Banks will not lend you money on the same property as they consider it a bad asset. Therefore, being prepared with cash is very important when planning to buy a bank-owned home. You can borrow money from another bank or ask someone to invest with you. Remember that you can get a better deal when you already have cash on hand.

· Find out the market value of the property you are interested in. One way to do this is to look at the value of properties that are more or less the same as the one you are considering. Knowing the market value of the bank-owned home gives you insight into whether you’re really getting a good deal. Compare the price of the property with its real market value. This will allow you to come up with an offer price.

· Call and make an offer. Your offer price should be competitive but reasonable. Bank-owned homes are already priced below market value, so it wouldn’t be a good idea to make a really low offer. However, it depends on the situation and the property in question. There are times when banks accept a really low offer, especially if the property has already been on the market for too long. An offer of at least 15% off the bank price should be fair enough.

· Be ready for escrow. If your offer is accepted, the property goes into escrow or certain requirements are met before you can take possession of the property. This typically takes 30 days with an inspection period that you can use to assess any necessary renovations. You can use this free inspection period to call your contractor to estimate what improvements need to be made. Ask your contractor to send the amount to the bank, as some banks may consider additional price reductions.

Then close the deal if everything goes according to plan and start with the necessary improvements. Get the word out that you’re working on a property that will be for sale when renovations are complete. Market the property and host an open house. The house that was previously owned by the bank is going to be the new house of a family in which it can benefit.