bank foreclosed homes

Bank foreclosed homes are coveted by investors because of their profit potential. It is not uncommon to find bank foreclosed homes sold at prices much lower than their market value. If you follow the old business adage "buy low sell high", you stand to get a nice return on your investment when you invest in bank foreclosed homes.

What Are Bank Foreclosed Homes?

Bank foreclosed homes are homes that are owned by banks or other lending institutions because of the lender having foreclosed on the property. When a homeowner cannot pay the mortgage for a few months at a time, the bank will initiate foreclosure proceedings against the owner. Up until the time that the foreclosure is final, the investor has the opportunity to buy the property directly from the owner. The owner will be anxious to sell to avoid having a foreclosure as a black mark on their credit report. If the property has accumulated enough equity, the investor will make a very nice profit.

After the foreclosure is final, the bank foreclosed home will be offered for sale, either directly by the bank, or through real estate auctions. At this point, the lender is very eager to sell the bank foreclosed home for several reasons:


It is not cost efficient for lenders to own bank foreclosed homes. They are expensive to maintain since the bank must carry insurance on the property, pay taxes, and maintain and secure the property.
It does not look good on the lender to have a large inventory of bank foreclosed homes. It just magnifies their bad lending decisions.
The lender needs to recover the losses they have incurred on bank foreclosed homes.