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The bank’s primary goal is to at least break even on all the costs that it has sunk into the property. That includes the unpaid balance of the loan, the expenses associated with the foreclosure proceedings, other liens and repairs to the property.

Your goal as a buyer is to purchase the property below market value, minus any estimated repair costs. This is often possible if you contact the bank quickly and are a prepared buyer ready to make a purchase.

In the recent real estate market, buying directly from the bank has not been as profitable as buying during pre-foreclosure or at the public auction. That’s not to say there aren’t good deals available. And many buyers and investors prefer to buy directly from the bank because it’s typically a more predictable process than buying during pre-foreclosure or at a public auction.

You’ll probably get a better bargain if you’re willing to buy the property “as is,” meaning you’re willing to buy the property in need of a list of repairs disclosed by the seller. Of course you’ll still want to figure estimated repair costs into your final purchase offer.

Banks may be more willing to sell at a below-market price if they have a glut of foreclosures, which are non-performing assets from their perspective. If you’re an investor or buyer looking for more properties to purchase, you should let the asset manager or REO officer know to contact you in the future if the bank needs to quickly unload foreclosure properties.

Close the deal
Once you’ve arrived at an agreement with the foreclosing bank, you can put the agreement in writing. You should have a local real estate agent or real estate attorney help if you’re not familiar with how to draw up a purchase agreement.

Any purchase agreement should make closing of the deal contingent on a full title search conducted by a title company or attorney. The purchase agreement should also allow for a professional inspection of the property before closing the deal.

An escrow company, who acts as a third party, can manage the transfer of money and property ownership. Assuming that you have your financing secured, this should be a fairly smooth process.

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