Bank Foreclosures

Written by Stephanie Dula
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Bank foreclosures are the end result of a mortgagor who has defaulted on his or her loan and the subsequent repossession of the home by the bank lender. Bank foreclosures, or Real Estate Owned (REO) properties, are the most popular way to buy foreclosures. While some real estate investors see REO properties as the least financially lucrative foreclosure types, there are certainly benefits to purchasing bank owned homes.

When a borrower defaults on a loan, banks and other lenders will first try to resolve the problem without resorting to the headache and hassle of foreclosure. Contrary to what many homeowners think, banks do not wish to foreclose on property to regain their losses. Since banks prefer dealing with money, not real estate, they would much prefer to work something out with the owner, rather than having to repossess and sell the home.

Advantages of Bank Foreclosures

If foreclosure is not to be avoided, the bank will put up the repossessed property for public auction. If there are no bids to satisfy the bank's need to make up for losses incurred during default, the bank will buy the property back and attempt to quickly resell. Buyers will benefit from a seller who is eager to dispose of a potentially valuable piece of property.

Buyers of bank foreclosures also benefit from obtaining a clear title on a home with no other parties to deal with that may have financial interest in the property. And since the foreclosure is said and done, there will be no original owners or tenants with which to get involved. Buying REO properties may indeed be the best way for first time home buyers and investors to take advantage of the foreclosure industry.

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