Housing Crisis Upside: Bargains for Everyone

Skip the Bank, See an Investor?

The easiest way to figure out which homes are bank owned is to ask a real estate agent or use online sites, such as Redfin and ZipRealty, which allow would-be buyers to search for foreclosed properties.

This three-bedroom home in Jacksonville, Fla., was valued at $87,000 but sold for $9,750 at auction./Courtesy www.Bid4Homes.com

Related

RSS Feed: Send News to Your Computer

Business News: Sign Up for MONEYScope E-Mails

"If you know what you are doing, you can get a great deal. If you don't, it can be a huge waste of time," Kelman said.

Often the buyers of bank-owned homes are investors who then resell the properties. But just because an investor got to a home before you did, doesn't mean you won't still get a good deal, said Lisa Lauroesch, the vice president of business development at the online auction company Bid4Assets Inc. in Silver Spring, Md.

An investor purchased this Detroit multifamily home from a bank, made some repairs and then resold it for $8,000. /Courtesy www.Bid4Homes.com.

Investors, she said, will sometimes renovate homes and, though they sell them for higher prices than what they paid the banks, their listing prices may still be dramatically lower than the home's previous sale prices, Lauroesch said.

She cited a partially renovated, multifamily home in Detroit recently listed on her company's Web site, Bid4Homes.com. In 2006, the six-bedroom duplex sold for $42,000. After being foreclosed, the house was sold by the bank to an investor who later resold it to someone else for $8,000.

"$8,000 is still a good deal, regardless of what the person bought it from the bank for," Lauroesch said.