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Bank owned Properties and Foreclosures

Most of the time when a Bank forecloses on a property, the property in question ends up being listed and sold like any other property on the market.  So as you look through the listings you may very well be seeing lender owned properties.  The Wickenburg area does not see too many Foreclosed properties because most of our buyers our coming in with large down payments or all cash.    If you are going to find foreclosed properties then they will most likely be in the lower price ranges where the working class, and first time buyers are shopping.  To put a number on it I would say $275,000 or less in most cases.

How much can I save?
There is a common misconception that you can buy a foreclosed property much cheaper than the market value, but that is not usually the reality.  The lender does not want to keep the property long, but that does not mean they will give it away either.  The lender's want to get as much for the property as they can just like anyone else.  The biggest difference with a lender owned property is that they won't sit on it for a long period of time.  Generally speaking a lender will continue to drop the price of their listing until it generates a sale.  Many people come to lender owned properties with low ball offers, but the result is almost always the same with the offer being rejected, or sometimes countered.   In my experience the lender will probably not come down more than about 5% to 8% off their asking price.  How far they come down is influenced by time on the market, and interest level.  So a lender owned property will sell under market value, but you could just as easily find an equally good deal down the street with a conventional seller.

What is the risk?
There are a few differences purchasing a lender owned property versus a conventional seller.  The primary difference is that the seller/lender will not disclose any information about the property, and will not be held liable for any problems related to the property. A conventional seller is obligated to disclose any important facts about the property and could be held liable if they try to hide anything.  The lender owned properties are sold "as-is" and careful investigation is advisable.   The lender / seller will also be very specific about the terms of escrow most likely dictating the Title company used, the length of escrow and the length of the inspection period, and will almost never consider a contingency.

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