There are many investors today who covet bank foreclosure homes as they see the potential profit that they can make from one. It is not uncommon to find a foreclosure home being sold at a price which is much lower than the actual market value. If you follow the old saying 'buy low sell high' you stand to earn a nice little return on your investment.

So what is a Bank Foreclosed Home?

These are homes that are owned by a bank or other lending institution because the lender has had to foreclose on the property. Often foreclosure proceedings will be initiated by a bank when the owner can not pay the mortgage over a period of time. But before the foreclosure is finalised an investor, if they so wish, has the opportunity to purchase the property directly from the owner. Many owners are anxious to sell by this method so that they do not have a foreclosure black mark on their credit report. Should the property have accumulated enough equity then the investor is likely to make a very nice profit from it if and when they sell it on.

However if the foreclosure becomes final then the property will be offered for sale either directly by the bank or the lending institution through a real estate auction. When it reaches this point you will find that the lender is very eager to sell the property as well for several very important reasons.

1. It is not cost efficient for any bank or lending institution to own a foreclosed property as they are expensive to maintain. They will need to cover the insurance on the property, pay any taxes that the property is liable for, as well as maintain and keep the property secure whilst it is vacant.

2. It does not look good for any bank or lending institution to have a large portfolio of foreclosed homes as this will just magnify what bad lending decisions they have made.

3. Many banks and lending institutions when selling a foreclosed property will recover any losses that they have incurred upon its sale. They don't care if they make a profit as well.

What is a Bank Foreclosure Home Auction?

This is where banks will sometimes sell foreclosed homes through a real estate auction. If you do your homework right then buying a foreclosure home at auction can be a sound investment. But if you do it carelessly then you could end up paying a lot more for a foreclosure home than it is actually worth.

What you need to do is inspect any foreclosure home thoroughly before you put a bid on it. You will need to calculate the cost of repairing the property as well as what it is actually going to cost you to purchase. Unfortunately there are times when an inspection of the property cannot take place so only bid on these kinds of property if you have a nice margin for any unknown repairs that may occur.

Unfortunately, as with anything that is going cheap, foreclosure homes do not stay on the market for long, so an important aspect of investing in such properties is to have good listings so that you can get to these properties before they are sold. You can obtain foreclosure home listings from Courthouses, Lending Institutions or Government Agencies (but only use these methods if you have time to spare). Otherwise the best way of finding good foreclosure home listings is to sign up with one of the online bank foreclosed homes listing services that are now available. These will provide you with accurate and timely listings of foreclosed homes so that you can be one of the first investors on the scene when a foreclosure home becomes available.

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