The Real Deal Behind Bank Foreclosed Homes Buying
May 12th, 2009 by 
Joseph Smith
To thousands of homeowners of bank foreclosure homes who were forced out of their properties which they bought with their hard earned money, foreclosure is a tragic experience that could leave a bitter imprint on their lives.
The foreclosure crisis could have been a bane to thousands of homeowners but to some, it means an opportunity to own affordable distressed homes. The real estate foreclosure market in the state is inundated with cheap bank foreclosed homes which sell for as low as $20,000 per unit. The reason for this? Banks are in a hurry to sell foreclosed properties in their inventory.
However, real estate agent Chris Mayhew cautions potential buyers of foreclosed homes about deals that sometimes are too good to be true. Housing experts agree that there are many bank foreclosed homes on the market, but there are also lots of risks involved in those deals, especially with the property’s condition.
It is the practice of banks to buy back the repo houses at foreclosure auction. Then, to recover immediately their investments and avoid the cost that they will incur if the foreclosed properties will remain unsold for a long period of time, banks will quickly sell these properties at bargain prices to entice buyers.
And most often, these foreclosed properties have structural defects and other problems that are in need of repair, such as outdated electrical systems, dead furnaces or unsound roofs. And usually, buyers inherit these problems in addition to the responsibility of having them repaired.
Real estate agents said that in some cases, foreclosure properties are in such bad shapes that lenders refused to finance them. They added that many repossessed homes are acquired by investors who have high credit limits or lots of cash.
These investors would buy foreclosed properties, repair and rehabilitate and sell them at a profit. They claimed that it is common for foreclosure homes to need major repairs, including electrical work, roofs, furnaces, windows, repainting, plumbing repair and trim work.
But still, they keep on buying bank foreclosed homes because they expect to fully profit from the venture in about five years when the real estate market rebounds.
