How Cheap Are Bank Owned Houses?

Before you start looking into buying bank owned houses as investment property you first want to know how the bank came to possess that property and why they’re trying to sell it. Most people assume that bank owned property can be had for a song because, after all, what does a bank want with a house? Surely they want to get rid of it as quickly as possible so they don’t have to worry about maintaining it. Why, they’re going to probably pay me just to take it off their hands! Let me assure you. This is definitely not the case. And if you are not careful when you’re buying bank owned houses, you could end up paying much more than the property is actually worth.

Initially, when a property goes into foreclosure, it’s placed up for auction at a foreclosure sale. And the same misconception applies here as well. Folks assume that if a property is listed at a foreclosure sale it must be a very great deal because all you have to do is finish paying off the mortgage. But, if there were enough equity in the house the buyer probably would have made arrangements to sell it himself and pay off the loan. The minimum opening bid at a foreclosure sale includes the loan balance, the back interest on the loan, attorney fees and different fees related to the foreclosure proceedings. And when you combine all of that the minimum opening bid will often be much more that the property is currently worth. That’s the reason the owner didn’t sell it in the first place and that is why most foreclosure properties do not even get an opening bid.

The property then becomes one of these bank owned houses you are considering buying if it does not sell at the foreclosure sale. Again, most folks assume that the bank doesn’t want to be involved in property management and they’ll be willing to let it go for a song. But, with the number of foreclosures rising, banks are setting up entire departments to allow them to handle these properties as assets rather than debits.

The bank makes minor repairs, takes care of any tax liens and association fees, and then adds all of this on to the other money owed – the balance of the loan, the back interest, etc. Now the price on the bank owned houses is even more than it would have been if you’d purchased it at the foreclosure sale. And if the property wasn’t worth the investment at the foreclosure sale it certainly is not worth the price you will have to pay if you buy it from the bank.

Obviously, there are some very good deals out there on bank owned houses. But you must first do the necessary research to find out how much the home is worth. It’s possible to buy bank owned houses at a really low price, but it’s still usually a lot more than just a song.

Learn more about bank owned houses. Stop by Vladymir Rys’s site where you can find out all about bank foreclosure and what it can do for you.