| ank foreclosure process is a several step process | | | | banks will attempt to sell the property at anywhere |
| which is activated by a bank which owns a mortgage | | | | between ten and fifteen percent below market value |
| that is not being paid on. Typically a bank will take | | | | since the property is considered to be a liability by the |
| steps to correct the situation prior to beginning the | | | | bank. |
| bank foreclosure process. This is due to the fact that | | | | Can Buying Bank Foreclosure Properties be Profitable |
| this foreclosure process is quite costly to the bank and | | | | The profit making potential of a bank foreclosure |
| under most circumstances the bank will end up losing | | | | property varies widely based on the situation. Typically |
| money on the resale of the home as well making it a | | | | a bank foreclosure process can be bought in any of |
| huge overall loss to the bank. | | | | the three major stages of the entire foreclosure |
| There are actually three common steps associated | | | | process. In the lis pendens stage the property owners |
| with a bank foreclosure. The first step is when the | | | | may be allowed by the bank to perform a short sale. |
| bank files for lis pendens or suit pending. Essentially this | | | | In some rare circumstances properties can be picked |
| stage is when the bank files a formal document with | | | | up at or below the market value. It is fairly rare to get |
| the court system indicating that they have no received | | | | a great deal in this stage since even if the owners try |
| a mortgage payment for a period of time. Most banks | | | | to sell at a great price the bank will usually decline the |
| will allow around six months of no payment before | | | | deal. Auctions on an extremely rare occasion can yield |
| proceeding with this step. | | | | great deals. Unfortunately since most people who end |
| The second step of the bank foreclosure process is | | | | up going into foreclosure fail to make any payments at |
| when an attorney representing the bank formally | | | | all or only make one or two from the time they bought |
| requests an auction to be held on the house. The goal | | | | the property the mortgage value is usually equal to or |
| of this form of auction from the banks perspective is | | | | greater than the actual property value. Buying bank |
| to hopefully sell the property off for more than what | | | | owned properties in the right market can be extremely |
| the mortgage is for. The opening bid always belongs | | | | profitable but even these can carry potential pitfalls. |
| to the bank and it is for the current mortgage amount. | | | | Under normal circumstances banks will list these |
| Under most circumstances no bids will be made on the | | | | properties at 10% to 15% below market value but they |
| property since in most cases the properties are worth | | | | often require extensive rehab work. In some |
| less than what is owed on them. | | | | extremely weak markets bank owned properties can |
| The final stage of the bank foreclosure process is | | | | be found which are selling at 30% to 50% below |
| when the property transfers back to the bank. At this | | | | market value. At this point these properties can |
| point the property is known as a bank owned property | | | | become great investments. |
| or real estate owned property. At this point most | | | | |