Bank owned properties are much preferred for their affordability and their relatively good condition. The homes cost below their actual market value due to the factors leading to their sale. Foreclosures are the result of mortgage default. When home owners fail to meet their mortgage obligations lenders initiate foreclosure proceedings. Mortgage provider, usually banks will attempt to sell these homes in order to recoup their losses from the mortgage default.
Most bank-owned properties can be purchased at a very low price. But banks would only want to deal with buyers who are able to show proof of their ability to pay. Fixing one's finances will enable them to set their budget and determine the kind of home they may be able to afford.
Buyers have various ways to spot affordable foreclosures. Distressed home owners sometimes sell their homes short to prevent foreclosure. Short sales are approved by the lender first because they have to agree to give a further discount on the outstanding debt. Short sales stop the foreclosure process and saves home owners from the stigma of foreclosure. If you wish to acquire property in this manner it may be a good idea to check on the title of the property to determine if there are hidden taxes or other liens attached to it.
Another way to purchase foreclosed homes is through public home auctions or sheriff's sale. A public auction is a venue for buyers to compete for a distressed property through bidding. Keep in mind though that auctions are cash sales and buyers need to be able to back up any bid they place with cash. So it is best to set a ceiling on how much you are willing to bid to obtain the home. Auctions can be emotionally charged events where buyers sometimes get carried away and bid more than their own personal limit, which beats the purpose of buying bank owned properties in the first place.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.