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There are homes on the market right now that are bank owned.  Are they a bargain?  In most cases no.  There seems to be a myth that banks sell these homes for what is owed on them or at a discounted price.  Not true.

Banks usually get a couple of price opinions and an appraisal to determine the value of a property before putting it on the market.   However, once the property is on the market for a time they will start reducing the price just like any other seller would.  Surprisingly the best source for information on foreclosed properties is through your local REALTOR.  The web sites that feature foreclosures are not always up-to-date, and some sell your information to REALTORS as leads.   Most banks work with and hire REALTORS to list and sell the properties they own.

I have helped buyers purchase bank owned properties.  The process is a little different because these homes are owned by banks which have their own rules and policies.  Offers are usually presented via fax and it sometimes takes days or weeks to get an answer.  Offers need to be perfect and complete with special clauses added that are required by the bank. 

Foreclosed homes are always sold ‘as is’.  The owners, have never seen the property and will not take responsibility for it’s condition.  Buyers should always have it inspected.

I have run into buyers who do exhaustive research on foreclosed homes in an attempt to find out how much is owed on them.  This information will not help in determining how much the bank will sell if for or how much it is worth.  To determine value have your REALTOR do a market analysis and compare the home to comparable homes in the area that have recently sold. 

In general buyers should treat bank owned properties like they would any other home on the market, and not assume it is a bargain because of who owns it or how it is being sold.