The Most Effective Bank Owned Home Buying Strategy

In buying a bank owned home, it is important you have an effective strategy to follow. This will ensure success and make everything systematic and organized - a truly great experience.
| Wednesday, September 14, 2011

There is no question buying bank owned homes is a good way to enjoy an impressive return on your investment. However, not everyone succeeded in this endeavor especially those who thought it is just a matter of finding a foreclosed home and making an offer. It actually requires so much more than these and to keep everything organized and virtually risk-free, you need to have an effective strategy with the following steps: 

Step 1: Preparing Yourself

The search and purchase of a foreclosure will probably translate to the accumulation of documents so you will need to make sure you have a system in place to keep all information organized. Remember it is possible you will be looking at many foreclosed home and you need to make a list which you can refer to when it is time to make a choice. 

Step 2: Finding a Reliable Foreclosure List

Seasoned foreclosure buyers and investors know a good deal does not fall on your lap. You need to find it. The best way is to partner with a reputable foreclosure listings provider who can offer you complete and updated information on foreclosures. You might want to go with someone who can offer online access to their listings for your convenience. This way, your search can also be efficient since all you have to do is to click your mouse. 

Step 3: Knowing What You Want in a Home

Aimlessly browsing through pages upon pages of repossessed properties will only waste your time if you have no idea what you are looking for. You should make a checklist of all the qualities in a home you prefer and list them according to priority. It is likely you will not find the home of your dreams but finding one which possess most of the qualities on your checklist should be enough. 

Step 4: Narrowing It Down

Once you have a shortlist of potential foreclosed homes to look at, it is time to narrow them down. You can eliminate based on the answers the trustee or agent you will have to call to confirm the property’s current status. If you have the time, you can even personally visit and check out those on top of your list. This way, you also get to see not only the home but also the neighborhood and surrounding community. 

Step 5: Doing Your Homework

Many times over it has been repeated how important it is to do due diligence when it comes to buying bank owned properties. This is because these homes are sold in whatever condition they are currently in, so you can expect to spend money on repair. 

In addition to this, you also need to look at similar homes being sold in the neighborhood, particularly the asking prices. This is called doing comparable market analysis and it will help you determine the right offer amount. 

Lastly, there is the title. You would not want to be surprised if a second lien creditor suddenly shows up on your doorstep and asking to be paid. Simply check with the local Registry of Deeds to see if the property is encumbered in any way.

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