Foreclosure property consists of all types of realty recovered by mortgage lenders. Once repossession occurs banks attempt to sell properties through public auctions. If no one meets the reserve price properties are returned to the servicing lender.

Buying a foreclosure property seizure can be a profitable investment as long as buyers are informed of potential risks. The process of buying bank repossessions varies by state, so it can be helpful to consult with a realty professional prior to placing auction bids or purchase offers.

Special attention should be paid to bank acquisition properties sold through auctions. Those who have never purchased via auctions should consider sitting in one or two auctions to become familiar with the process. Repossessions usually require repair, so it is important to get a home inspection and property assessment to determine the fair market value.

Unless buying foreclosure property with cash, buyers typically must obtain preapproved funding when placing offers at auction houses or lenders. It\’s a good idea to comparison shop home loans to obtain the best interest rates and closing costs.

Real estate owned by banks is usually priced a bit higher than properties sold through auction. It is not common practice for banks to make repairs unless a drastic problem is present, such as electrical or plumbing issues that could cause further property damage. Any work performed while in the hands of banks is not guaranteed or covered under warranty.

Buyers place purchase offers directly to the bank or their designated realtor. Banks rarely accept offers below the asking price. It is quite common for multiple people to submit offers against the same property; especially when properties are priced well below market value. Buyers may want to submit offers above the asking price if the price is deeply discounted.

One source buyers are using to buy discounted foreclosure property is Fannie Mae Homepath. With rising foreclosure rates, Fannie Mae adds new property listings nearly on a daily basis. In addition to low-cost residential homes, this program is tied-in with Home Path Mortgage and offers buyers the opportunity to finance properties using special features not available with conventional loans.

While buyers can finance Fannie Mae homes through the lender of their choice, Home Path Mortgage is a good option for those who cannot afford a large down payment or those who have credit blemishes that prevent them from obtaining bank loans.

Home Path offers buyers the option of providing as little as 3-percent in down payment funds. Qualified buyers can save additional funds because they do not have to pay mortgage insurance or lender-requested appraisals.

Investors find Fannie Mae homes attractive because of the reduced prices and special financing options. However, this program is focused on helping individuals buy a home, so investors must wait until properties have been on the market for 15 days before placing purchase offers. Fannie Mae utilizes the \’First Look\’ program which grants individual buyers first dibs on new property listings.

Buyers should consider investigating HUDs Neighborhood Stabilization Program which offers grant money to buyers purchasing real estate in neighborhoods with extensive foreclosure rates. Qualified buyers can receive a maximum of 20-percent of the purchase price to cover costs of rehabbing the property.

Buying foreclosure property is not without risk, but as long as buyers conduct due diligence these risks are minimal. Rehabilitating an oppressed property can revitalize an entire neighborhood and provide a wonderful family residence.

Author Bio: Simon Volkov is a California real estate investor who shares his personal experiences with buying foreclosure property. He provides tips for buying houses through public auctions and negotiating with mortgage lenders at www.SimonVolkov.com.

Category: Real Estate
Keywords: foreclosure property, home path mortgage, fannie mae homepath properties, real estate owned by banks