Bank foreclosed homes are coveted by investors because of their profit potential. It is not uncommon to find bank foreclosed homes sold at prices much lower than their market value. If you follow the old business adage "buy low sell high", you stand to get a nice return on your investment when you invest in bank foreclosed homes.

What Are Bank Foreclosed Homes?

Bank foreclosed homes are homes that are owned by banks or other lending institutions because of the lender having foreclosed on the property. When a homeowner cannot pay the mortgage for a few months at a time, the bank will initiate foreclosure proceedings against the owner. Up until the time that the foreclosure is final, the investor has the opportunity to buy the property directly from the owner. The owner will be anxious to sell to avoid having a foreclosure as a black mark on their credit report. If the property has accumulated enough equity, the investor will make a very nice profit.

After the foreclosure is final, the bank foreclosed home will be offered for sale, either directly by the bank, or through real estate auctions. At this point, the lender is very eager to sell the bank foreclosed home for several reasons:

• It is not cost efficient for lenders to own bank foreclosed properties. They are expensive to maintain since the bank must carry insurance on the property, pay taxes, and maintain and secure the property.
• It does not look good on the lender to have a large inventory of bank foreclosed homes. It just magnifies their bad lending decisions.
• The lender needs to recover the losses they have incurred on bank foreclosed homes.

Bank Foreclosed Homes Auctions

Sometimes the bank foreclosed homes will be sold at real estate auctions. If you do your homework and play your cards right, buying bank foreclosed homes at auction can represent a great investment. On the other hand, if you do it carelessly, you could end up paying a lot more for the bank foreclosed home than it is worth.

You need to inspect the bank foreclosed home thoroughly before you bid on it. Once you calculate the cost of any repairs needed, add it to the total cost of the property. Remember to account for the time that it will take to repair the bank foreclosed home. Sometimes an inspection is not possible, so you should only make bids that leave a nice margin for any unknown repairs.

Bank Foreclosed Homes Listings

Good bank foreclosed homes do not stay in the market long. An important aspect of investing in bank foreclosed homes is having good listings so that you can get to the properties before they are gone. You can get bank foreclosed homes listings from courthouses, lending institutions, government agencies, etc., but unless you have a lot of time and resources, this is not a good option.

A better use of your time and money is to sign up with an online bank foreclosed homes listings service such as ForeclosureDeals.com, which provides you with accurate, timely listings of bank foreclosed homes so you can be the first one on the scene when a bank foreclosed home comes on the market.

Ernani Uchoa is the author of Foreclosuredeals.com, Leading source of Foreclosure Homes and Bank Foreclosure Listings. For more information please visit http://www.foreclosuredeals.com or subscribe to get our news feed on our foreclosures blog.