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Absolutely they are!  However, a few things you should know before considering a bank-owned property.  For instance, because the bank has never occupied these properties, the “seller’s disclosure” describing pre-existing conditions with the house is requested to be waived by the buyer.  How does this affect you?  Put yourself in the previous owner’s shoes for a moment, taking care of the property or maintaining major systems wasn’t at the top of their priorities.  As a first time homebuyer, having a down payment and expendable cash to spend on costly repairs is something you want to be forewarned about.  Having a good inspection is one way to foresee these problems and budget some improvements.  

There have been some rumors that banks don’t like first time homebuyers or FHA loans.  Not the case!  In fact, Freddie Mac and Fannie Mae both have programs that assist first time homebuyers who are planning to occupy the property.  For example, Freddie Mac is offering 3½% closing cost and a home warranty to this buyer pool.  Great deals like this do need to be negotiated with an agent that knws how to qualify you when the offer is submitted and not many agents are expertly aware of how to do this. 

I think a short history lesson is worth mentioning to show how the market is being helped along to recovery.  During the savings and loan crash in the 80’s, foreclosures saturated the market and houses were auctioned off by HUD.  Investors bought properties for 25 cents on the dollar.  Nobody won!  Thank goodness we learn from our mistakes and understand that investors aren’t the only ones that should be able to reap the benefits of the current housing market. Banks understand this and it’s good PR for a not very popular industry right now.  So, as a first time homebuyer, find a good agent and take advantage of the historically low prices and interest rates.