What is a bank foreclosure?Unless you have been hanging out under a rock you already, know that the housing market in the United States has been falling in value, which is caused partly by the number of homes that are facing foreclosure.In many situation The borrowers of these loans for whatever reason failed to make their monthly payments as they had agreed to. In turn, the bank, which held the mortgage on the home, was forced to take back the property in the hopes of selling it and getting out of the debt.This is precisely what a bank foreclosure is. It is a home that is owned by a bank that held a mortgage on a home in which the owner failed to keep up with their monthly payments.
These homes are now on the market and being sold. There are many misconceptions about these homes and often people do not realize that they make a great investment.Here are three important points you need to know about these foreclosures.
1: Bank’s Sell For Less, Often
One of the key benefits of buying foreclosure homes is that the bank is often willing to sell the home fast even at a discounted price.Owning these homes is not what they want therefore they need and want to sell. Often, bank foreclosure homes will be sold below their appraised value.To the average lender this means that the property is quite profitable to them.
2: Bank Owned Homes Aren’t A Mess
Many people feel that bank foreclosure properties are properties that are run down and beaten up. In fact, they are homes just like any other you would walk into in the hopes of buying them. The good news is that these bank owned properties are often in good condition.Many offer a range of possibilities for low cost, without a lot of repair.With that said, you should understand that you still need to invest in appraisals and home inspections to insure you understand the level of need the property presents.
3: Regular Home Loans Work
Another misconception people have about bank foreclosure is that these homes are being bought solely by the well heeled who can afford to fork over a great deal of cash. While some investors do this, most do not because it eats their reserves. Additionally, anyone can purchase a foreclosure with a standard home loan.
Although bank foreclosure is not a pretty picture for many people, it can be an opportunity for real estate investors to get into a more affordable home quickly.
Why Wouldn’t A Bank Negotiate Over A Foreclosure?
I found a nice simple home that will require little "fix up".
The home has been owned by a bank for over a year after a foreclosure.
I have preapproved by them but they will not budge on their terms.
For example I counter-offered their price. I was told the terms were non negotiable.
I tried to talk down all the ridiculous fees they want upfront like points, etc. They did offer to roll the approximately $5,000 of these charges into the 7.45% loan. Gee Thanks!
I pay less interest on my car! Why is this bank being so stubborn, when you would think they would bend over backwards to get rid of the property?
Well, you don't need to get the financing from that bank! My guess is, you've got less than stellar credit (7.45% rate indicates that), and they don't want to foreclose a second time on that house.
They must think they can sell this without much difficulty.
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If it is a foreclosure then they have a certain amount tied up in the property. If they take less than that then they will lose more money then they have probably already lost on the house. As to why they won't budge on the terms, they probably are using that to gauge how serious the buyer is. In their minds, If somone can't meet the up front costs then that would likely mean they'll be left holding the bag on another foreclosure for this house. I hope you get it.
PS….. Paying the points up front will buy you a better interest rate so it might be worth it.
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The bank is playing this game because the manager and the loan officer in their department doesn't want to have to report a loss on their shift . They will lose much more by not selling the house at reasonable market value but its no skin of their nose.
We have a bank foreclosure in our neighborhood that has been on the market for about a year . The owner put zero down and made no payments, so the bank has the house priced at $580,000 instead of the market value $470,000 to cover their costs.
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Take the highest rate possible with the lowest fees. Then refi afterward.
Or find another house and screw these guys.
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Something is not right in the negotiations or the terms you are offering. Maybe you are low balling them?
Regards
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