Bank Owned Homes

You hear a lot about “bank owned” homes today. These are homes where the lender has completed the foreclosure process and has the actual title to the property. Lenders are not in the property management business, their intent is to sell the homes as quickly as possible for the highest price they can get. Most of the homes are listed with a local real estate firm and some will be auctioned through an auctioneering company.

Two weeks ago I had an out-of-area client call to ask about buying a bank owned home in El Dorado County. She went on Foreclosure.com and told me that there were 900 listed in El Dorado County. That was a surprise to me since the total number of listings in the county is 1,700. A visit to foreclosure.com’s web site revealed that they combined bank owned homes with short sales, defaults, for-sale-by owners and “other deals”.

So just home many bank owned homes are there around the region? If you combine Sacramento, Placer, El Dorado, Amador, Nevada, Sutter, Yolo and Yuba counties there are 661 homes that the banks own. That’s considerably more than the 92 all the banks owned in the region in April of 2006 but considering the number of homes in the region, the impact on the total market is negligible.

Across the state the banks own 5,500 homes. A year earlier they owned 1,100. I suspect that the regional and statewide numbers will increase throughout 2007 and then decline during 2008. Everything has a cycle.

I have seen a few bank owned homes. Many are in locations where I did not want to get out of my car. In areas that give different meaning to a “drive by.” If I were buying another investment property, I would not exclude bank owned homes but I certainly would not shop them exclusively.