When I meet or speak with a new client for the first time, I can almost guarantee I'm going to hear the phrase "I'm looking for a great deal". Here's where the best deals are.
The best value in Real Estate is nearly always a Bank Owned Foreclosure or Real Estate Owned (REO) property. The reason is fairly simple.
The banks are the most motivated sellers on the planet.
Once a bank forecloses on a piece of Real Estate it becomes a huge liability, much more than the loss they incurred when the mortgage went bad. They are incurring the cost of holding a "non performing asset", but much more than that they have to place in reserve a large multiple of the value of the bad loan until the property is sold.
The reasons are complex and not really relevant at this stage. Suffice to say that when a bank forecloses on a property the law reduces the amount of money that they have available to lend by 70 times the amount of their liability. So if the face amount of the loan is $100K the amount of money taken out of their lending portfolio is $7 Million, and it remains that way till they dispose of the property. Think that doesn't make them motivated?
What you need to know is that a bank will price a foreclosure property very aggressively and will continue to reduce the price rapidly till it is sold, regardless of the actual market value.
A bank owned foreclosure will always be the best deal in town.
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