Tips for Buying Bank Property.

Mr. Sacaccio's viewpoint is an excerpt from an article he wrote advising interested people about how to go about participating in foreclosure sales and buying real estate-owned.

Foreclosure properties can be a terrific investment, or give homebuyers a much more affordable option than traditional properties. But they're not a way to get rich quick, and a foreclosure purchase needs to be approached in an educated, intelligent manner. Here are five tips to help you close a deal on a foreclosure property:

1. Learn about the different types of foreclosure properties and the foreclosure process.

There are three basic types of foreclosure properties, representing different stages in the foreclosure process: notice of default and notice of trustee, which are both pre-foreclosure properties; and real estate-owned, a foreclosure property which has been re-purchased by the bank. For most consumers, buying a pre-foreclosure property from a private homeowner is the best option. It's important that both the buyer and the seller see the situation as a win-win situation, in order to ensure a smooth process. In this case, the seller is able to get out from under a mortgage without destroying their credit rating, the lender is saved the time and expense of foreclosing on the property, and the buyer gets a below-market price on a home.

Foreclosure auction sales are typically the domain of the professional investor. These properties are formally in default and are sold to the highest bidder at an auction. Buyers are required to be physically present at the auction, and must pay 100% of the sale price in cash on the spot. Though foreclosure auctions can offer significant savings, they are not for the feint of heart or the uninformed. Unless the buyer is already familiar with a particular property, there is usually little time to examine it. And the buyer will be competing against professional investors - and sometimes even the lender - at the auction.

Once the lender officially reclaims a home, it becomes an REO property. While REO properties typically offer more time for evaluation and a more standard bank-managed transaction, their prices are usually very close to full retail market value.

2. Secure financing early.