Understanding Bank Foreclosures and Bank Owned Homes

The real estate market today is overwhelmed with a variety of issues and a glut of foreclosures and bank owned home inventory sitting stagnant. However complicated a process it may be, do not discount bank owned homes as a viable deal or way to get into today's real estate market. Bank foreclosures can present a rare opportunity to buyers and investors alike. Before you jump into the bank foreclosures market, be informed and have realtor representation. Also it helps to put your money where your offer is, up front and quickly to expedite the bank foreclosures process with the lender.

A home becomes a bank owned home or bank foreclosure once the owner defaults on their payments and cannot bounce back. The property then gets put up for trustee sale or foreclosure auction. At this time an interested buyer or investor has the opportunity to bid on the home. At this time the bank or lender may also repurchase back the home. If the property does not sell to someone outside of the bank, the property becomes real estate or bank owned property.

Bank owned property, or bank foreclosures then become an opportunity for an interested buyer or investor to contact the lender with their interest in the property. It helps to show you are serious by sending in a firm offer, along with escrow check for a portion of the down payment on the home. Once this offer of interest gets into the right hands at the bank, it could help expedite things quickly. Banks do not want bank foreclosures sitting on their books indefinitely. They are looking to move these properties. After all, banks are in the business of cash and mortgage loans, not necessarily interested in holding real estate.

Keep in mind that the bank owned homes process can be different than your usual home buying process. For example, most bank loans will offer a "redemption period" where the homeowner may still repurchase the property. Be sure to have a good understand of bank foreclosures and a realtor to help you out in the process.