There are a lot of articles about foreclosures and advice for buying bank owned properties in major publications such as CNN or New York Times. However, most of these writers are not real estate professionals, probably never been involved in buying a bank owned home and they obviously generalize the statistics or information they have. So I've decided to put my two cents into it and be more specific for Foreclosure in Los Angeles area.

There is no doubt that finding Los Angeles bank owned properties have become easier. Back in the day, property investors were the ones who most sought out foreclosed properties for investments. These savvy investors used to go through legal filings and show up at courthouse auctions and bid on the properties with cash. Those properties that were being sold through courthouse auctions could not be physically inspected until the sale is final. Also many times it was uncertain if there were any liens placed against these properties.

Today, many banks sell their foreclosed properties through real estate agents. There are countless online databases to search for foreclosed properties and get all the information and even sometimes pictures. You can see the house, inspect it during escrow and finance the purchase of the house. And of course, it's also best to buy from the bank since the house is free and clear from liens once the lender takes ownership of the property. So it has become easier so that anyone can buy bank owned homes these days.

Physical Inspection: I always recommend my buyers to bring a professional licensed inspector to check out the property regardless if its bank owned or a regular sale. Lenders don't have any knowledge about the condition of their properties and many of their properties could be abandoned, vandalized and are usually fixer uppers. Properties could have major issues such as structural or foundation damage that are not obvious to the average buyer. Many bank owned properties are sold in a as is basis, meaning the bank has no guarantees on the condition of the house. Buyers are responsible to do inspection during their inspection contingency period. This is the time to make sure you won't have many surprises and know how much your renovation will cost you.

Bidding Process: This is a heated topic and everyone has an opinion and their own specific style. I am going to write about bidding process another time. One thing for sure, the banks are not necessarily selling their assets at fire-sale prices. And don't listen to people that say to set your initial offer 20% or 30% below asking price. There is no cookie cutter formula for setting an offer. You should consider several factors in order to decide on an offer price but the main factor should be condition of property, time of the market and of course location, location, location. The real estate market is not the same everywhere. Desirable areas such as Brentwood or Santa Monica have a lot of demands and don't be surprised if there is a bidding war for well priced properties in these coveted locations.

Although everyone can buy bank owned properties you must know that it is somewhat different than buying from an individual. These properties are sold through asset managers and their job is to dispose of these assets or products as high and as fast as they can. The good thing is that the asset manager doesn't have an emotional attachment to a property that an individual seller would. Asset managers handle numerous properties at once making it unlikely to get back at timely manner when an offer has been placed. And of course while you're waiting someone else can make an offer on the property that you want at a higher price. The bottom line is that you need to be patient and persistent when it comes to buying a foreclosed property. You should have a few properties in mind and have a solid pre-approval letter from a direct lender such as Bank of America or Wells Fargo before you make an offer