What is the risk in purchasing a Bank foreclosure?

Buyers today are faced with too many options when purchasing a home. This can be an especially difficult time for those who are new to the game and trying to buy their first home.

Bank properties are not always a bargin but they can offer great, sweat equity opportunities. I sell bank owned properties for a large national bank and I see the condition of these homes on a daily basis. In most cases the buyer is expected to purchase these homes in "as is" condition. This means, what you see is what you get. Sometimes there is no electric service or water service so you don't know if everything is working properly. Many banks will not accept home inspection or other forms of contingencies. You can however, complete an inspection prior to writing an offer to determine the condition of the property. In many cases the banks request non refundable deposits. If the buyer doesn't settle due to a reason caused by the buyer they will loose their entire earnest money deposit. Now for the bright side.

Purchasing from the bank is safer then buying at foreclosure auctions for a few reasons. Number one, you can see the inside of the property before making an offer. The bank has cleared title by going through the foreclosure process and it is unlikely that anyone will object to the sale. At a foreclosure auction you have to wait several months for a judge to sign an order approving the sale from the bank to you. You don't have this delay when purchasing from the bank directly. You also have to pay carrying charges from date of auction to date of settlement at a foreclosure auction.

There are great opportunities in the market today for buyers. Hire an experienced real estate agent who knows the geographical area you are searching in. Get pre-qualified and approved for financing prior to going out to look for properties. Make sure you are fully aware of the risks and returns of making a purchase decision. Most of all, get out there when the market is too good to be true and buy a home.