How To Buy Bank-Owned Homes

Foreclosure filings rose close to 20 percent nationwide last month versus February, according to foreclosure-tracking firm RealtyTrac.com, and for the 13th straight month, total filings topped 300,000.

In addition, bank repossessions reached an all-time, quarterly record. Through the first three months of 2010, banks reclaimed more than 257,000 homes.

Nonetheless, 4 states dominated foreclosure activity nationwide.

California, Florida, Arizona and Georgia accounted for more than half of all bank repossessions. It’s a disproportionate distribution of foreclosures. Together, the 4 states represent just 23 percent of the overall U.S. population.

The RealtyTrac report revealed some other interesting statistics, too.

• Foreclosure activity was up in 40 out of 50 states last month
• Bank repossessions rose 9 percent versus the same quarter last year
• For the 13th straight quarter, Nevada topped the state foreclosure rate

Regardless of where you’re buying, foreclosures and REO are making a profound impact on pricing and product. Distressed homes are 35 percent of the overall resale market.

There’s excellent value in foreclosures out there if you know where to look, but keep these points in mind:

1. Buying bank-owned homes can take 120 days to close or more. Be flexible.
2. Foreclosures aren’t always listed for sale publicly. Some inventory is privately-held.
3. Bank-owned homes are often sold “as is”. There may be defects that render the homes mortgage-ineligible.

The REO market can be different from the traditional “existing home” market.  Therefore, if you have an interest in buying REO, be sure to talk with an experienced real estate agent first.