Bank foreclosures are enticing to investors because they offer the possibility of huge profits. However, they are one of the riskier real estate investments. Prior to investing in distressed properties it's important to weigh the pros and cons. While it can be exciting to invest in a fixer-upper and bring it back to life, a handyman special can quickly become your worst nightmare.

Many bank foreclosure homes are in need of repairs and renovations. Rarely will you find one in perfect condition, so plan on engaging in physical labor or hiring others to perform the work. Prior to making an offer it's imperative to thoroughly inspect the property. If the house requires considerable work, use this to negotiate a lower price.

If you possess the know-how to do the work yourself, homes requiring substantial renovations could potentially reap a higher profit. If you are not the handyman type, avoid severely distressed properties. The cost of hiring contractors to conduct the work will quickly eat away at your profit margin.

Bank foreclosures are less risky than foreclosure homes sold at auction. Seasoned investors with the ability to pay cash for houses can generally negotiate decent deals at the auction. But, novice investors could easily end up paying more for the home than it's worth. Additionally, houses on the auction block oftentimes have creditor and tax liens attached and are in need of repairs. Buyers must be prepared to pay all associated costs when placing their bid. If you are unaware of liens, it could cost a small fortune to have them removed.

If foreclosed property isn't sold at auction the title reverts back to the bank. Also known as real estate owned (REO), bank foreclosure properties are sold directly through the lender. Some banks sell properties through their Loss Mitigation Department, while others use a Realtor. Most banks want to sell REO properties quickly. However, this does not mean they are eager to sell them for less than is owed on the mortgage note.

If you're lucky you might pick up an REO property for 5- to 10-percent under current market value. Currently, most banks are selling properties for no less than 95-percent of the note value. With the explosion of foreclosures across America, chances are banks will be forced to accept considerably less in the near future.

When making a bid on bank foreclosures, be prepared to engage in counter-offers. Rarely do banks accept the first offer given. Depending on the condition and location of the property, you may have to counter-offer several times before your offer is accepted.

Many novice investors make the mistake of becoming so captivated by a property they end up paying full price or above. Set a maximum price and be prepared to walk away if the bank is unwilling to negotiate. There are plenty of foreclosure homes to choose from, so keep your options open to ensure you get a good deal.

A little known secret to investing in bank foreclosures, is to purchase them from private real estate investors who buy bank portfolios. These mega-investors purchase distressed properties in bulk and pay wholesale prices. They carry large inventories and are eager to pass their savings along to you. Oftentimes, savings are 30-percent or higher; providing the buyer with instant equity.

If you're able to purchase distressed properties from private investors with cash, you can reap magnificent rewards. This option is enticing to investors who engage in house-flipping, as it allows them to quickly close the deal, make their repairs and sell the house for profit. It's also appealing to investors looking for rental properties.

Investing in bank foreclosures can be a gratifying and profitable experience as long as you weigh the risks and benefits. To be successful you simply need to educate yourself about the process, engage in due diligence, work with professionals and know your limits.

More info on your stop foreclosure information search:

Get Free Foreclosure Advice and Free Refinance Quotes
Get your free on-line foreclosure refinance quote and free advice from foreclosure mitigation specialist in minutes. Compare real offers from top national subprime and hard money lenders... more...

Bank Foreclosures One of the Easiest Ways to Buy Foreclosures
Bank foreclosures are homes and properties that are currently owned by various banks or lenders. These banks own them because they are the result of foreclosure actions. The previous owners of the home had fallen behind in their mortgage payments and the bank foreclosed on the home. Bank ... more...

How to Find Bank Foreclosures
Bank foreclosures are a great way to make money with the real estate market. Bank foreclosures, particularly when purchased by real estate investors, are considered investment properties. When a real estate investor buys bank foreclosures, they often try and fix up the home and update it and either ... more...

Bank Forclosures
Bank foreclosures are homes or properties that are owned by banks or lenders. The banks own them because they are the result of foreclosure. Previous owners of the property or home had fallen behind in their mortgage payments and the bank foreclosed on them. Bank foreclosures are actually one of ... more...

Bank Foreclosures - A Great Way to Make Money?
Have you been searching the internet looking for ways to make money? If you have, you may have come across a business opportunity that is listed as a real estate investing. If you have, you are urged to give it a closer look. What is nice about being a real estate investor is that you are, ... more...