You should be aware that sometimes homes that are owned by banks have not been maintained as well as others. While it seems that you would get a great deal consider this.
If the bank had to take ownership of the property it is becasue the owner was unable to pay the mortgage. That being the case, would you think they had the money to maintain the home?
A current client of mine thought he was getting a great deal on a foreclosure. He puchased the home for $50,000 less than similar new homes in the area. Once he moved in he found he needed a new septic system, and furnace. Not a good deal after all.
If you need any more help let me know.
All The Best
Shoreline Property Specialist
Coldwell Banker Residential Brokerage
The comments below, that these homes are in tough shape, are very valid. First, the person living there has sometimes trashed the house, second, the house has been empty, possibly vandalized, and not maintained eg burst pipes, etc.
Many years ago, I did buy a HUD property and it was a great little house.
You can now use Trulia to find foreclosure listings. On our results page you'll now find a selection for 'Resale', 'New Homes' and 'Foreclosure'. Access the link below to review our blog post to find out more and check out the link further below to view the 3-bed, 2-bath foreclosure listings in your area.
Customer Service Representative
There are several considerations which are applicable to correctly purchasing a foreclosed home. It is also important to note that there are different issues which arise when a home is a short sale or in a pre-foreclosure stage. So, first make sure you correctly identify the legal status of a home prior to pursuing a home purchase.
If a foreclosure has a occurred and the redemption period has expired, the sale will proceed in somewhat the same fashion that a normal home would with...certain caveats. First, the home is Sold as IS. There may be some rather unpleasant surprises. Inspections are for your benefit only...often you will not be able to negotiate on the basis of the results of an inspection. You may not get the keys to your property at the closing due to technical issues which affect the transfer of ownership.
If you're interested in reading more, I have written a series for homebuyers on my blog: http://activerain.com/blogs/auduhomes which gives detailed information about some of the issues you should be aware of when purchasing a property which is a short sale or foreclosure. Click on the home buyer tabs.
Most foreclosures are in WORSE condition and have HIGHER list prices than equivalent motivated owner homes. This is why you should want to compare regular listings with Bank REO's. If you look only at Bank homes, you are likely to overpay.
Low price for the area, really low, it will need a LOT of work..
You are willing to do the work, or oversee the work that will need to be done, it will need a lot of work...
You can afford the repairs that are needed, remember, it will need a lot of work...
I did an inspection last week of a bank owned property. The buyer got lucky on this one, it had been very well maintained for quite some time, with a lack of upkeep in only the past year or two. While there was a lot of work that was needed, the home is basically sound and the majority of repairs are only cosmetic. And the majority of the repairs are things that the buyer would want to change anyway, carpet, paint, lighting fixtures...
But this one was an exception, I have inspected several that I personally would have ran from, screaming and crying and hiding my checkbook.
Bottom line, be ready to spend lots of time, money and effort on these properties.
If you like that type of challenge and can get the bank to agree to your price, go for it, breathing new life into a tired building can have a lot of rewards of it's own.
I sell bank owned homes in the area. I would suggest looking at all the homes on the market that fit what you are looking for and in the price range you want to stay in as there are some good deals on private owned homes also and you don't want to miss a possible fit because it wasn't bank owned. I have some bank owned home information on my web site also.
Bank owned homes = new or novice investor.
Better stratgey, write a hand wirtten note and put it on the door of every house in a neighborhood you want to buy. You get better deals and better terms. My note usually says "my girlfriend and I are thinking about buying a house and yours looks cute from the outside. Do you know anyone who wants to sell in this neighborhood?" Works every time.