About four years ago, I wrote down this goal:

How to buy a foreclosure ‘“ research steps.

This was back in the day when you typically had to show up at a courthouse auction or go through the legal filings with a fine-tooth comb. Of course, the point of my goal was to actually understand the process so that I could buy a foreclosed home at a low price.

Buying foreclosed properties has become a lot easier since there is plentiful supply and now banks are listing many foreclosed homes through real estate agents.

CNNMoney.com points out two other advantages:

1. When a bank takes back a home, it will clear any outstanding liens.
2. When you buy a bank-owned property, you can inspect it beforehand and finance the purchase with a mortgage.

A bank isn’t going to list a foreclosure at fire-sale prices, but there are ways to nab a deal well below the market value. Realtytrac.com, one of the sites that specializes in foreclosed properties, suggests ways to get a better price and favorable terms:

1. Negotiate.
Investors should be prepared to negotiate a lower down payment, a lower interest rate, a reduction in closing costs and a lower asking price. Many lenders may be willing to waive some closing costs, maybe even offer a break on the interest rate or the down payment. Moreover, some lenders might offer to finance the property at a below-market rate or with a lower-than-usual down payment.

2. The Offer.
Although most banks want to unload their foreclosed properties, they won’t necessarily do so cheaply. So you aren’t guaranteed a fabulous price. But remember you’re dealing with an eager seller. Even though the bank’s REO manager or their listing agent might suggest that the list price is ‘œfirm,’ never be afraid to negotiate price ‘” especially if the foreclosed bank-owned home needs repairs. When submitting a low offer, you need to substantiate the reduced price in writing and document your case. You should furnish photographs and cost estimates for repairs to support your offer amount.

3. Financing.
With good credit, many banks will loan the full price of the foreclosure or more. If the home is to be used as a rental, many banks will require only a 10 percent down payment. Foreclosure investors with a large amount of equity in another home may get a line of credit from their bank to purchase a foreclosure. When they convert the line of credit to a mortgage, no down payment may be required.

It is an excellent time to buy a bank owned property. This year, I’ve written the goal down this way:

Buy a foreclosed property.

I’ll let you know if I can check this one off the list by the end of the year!

Photo credit: stock.xchng.