In this economy there are great deals available if you’re looking for repossessed homes for sale. Homes that have been taken back by the bank due to the sellers inability to maintain their mortgage payments for a minimum of 3 months are plentiful in this market in large cities and small towns.
In this article we’ll cover the time you should expect your purchase take, different types of homes available, important tips to ensure a successful purchase and using a real estate agent and escrow service.
Why Homes Are Taken Back
Bank foreclosure homes are taken back by the bank after three months of nonpayment; surprisingly as many as 12 months may have actually passed without payments.
More importantly, the home may have been occupied the entire time, which is good. This is preferable to the home sitting vacant when it is without the benefit of maintenance, utilities keeping a steady temperature and a higher threat of theft of appliances or even the plumbing.
With the downturn of the economy we are seeing homeowners who have been in their primary residence for decades lose that residence because they have defaulted on the first or even the second lien. Builders will overextend and find their only choice is to let that home go back against the construction loan. Sadly, the latter is a common practice for builders caught with too many new builds unsold at the beginning of an unexpected downturn in the market.
Although they are plentiful, repossessed mobile homes are not as good a buy as site built bank owned real estate. A home built in place – not delivered in sections – is going to appreciate at a much higher percentage and faster than a manufactured home.
In an economy flooded with bank foreclosed homes, buying a site built home repossession is a wise financial move. There are plenty on the market for one third their true market value. They may not have appliances and might need some repair but 80% will be unmolested and move-in ready.
Buying Bank Owned Properties: Preparing For Purchase
Once a buyer has their financing in place in the form of a letter of approval from a bank or mortgage broker, all they need is patience and $1000 of ready cash for prepaid costs.
These prepaids will include a home inspection and the appraisal.
The home inspection is a must to ensure the structure has no significant challenges harming the investment.
The appraisal would be the second expenditure and will tell you even more about the lendability of the home separate from the criteria a home inspector uses.
Patience is the next ingredient to a successful purchase. Hopefully, a real estate agent will be involved to pave the way. It will take more time than a typical escrow. The escrow company will be chosen by the bank and may only be available to the buyer through the real estate agent.
Both the buyer and the real estate agent will be at the mercy of the bank. The bank will then be at the mercy of the underwriter of the lender the buyer has hired. Once underwriting has given their approval of the home based on the appraisers advice and the money is released to escrow, the transfer of title is almost complete. Repossession homes represent an opportunity for the savy investor but there are many mine fields along the way, research, understanding of the various laws concerning homeowners and banks rights are necessary to protect yourself from making a bad purchase, due your research and cover all the bases ahead of time to insure a smooth transaction.
