Bank owned homes can also be known as real estate owned (REO) properties. Since both terms are interchangeable, there are many possible searches that can locate these types of properties online. Often, however, real estate agencies are the best places to look to for help finding these types of properties because they are familiar with what is on the market, and they may be aware of some homes that have popped up recently that fall into this category. Buying an REO property can have some tricky ins and outs, so it’s probably a good idea to hire a professional to help locate and decide whether to purchase homes. There are some differences in placing offers and making final checks to a bank owned property that may differ from a typical real estate property, so even buyers who are well versed in the world of buying homes may be caught off guard by the small changes in the process. Plus, they may have experience with the lenders looking to sell it, which can be beneficial when trying to contact them and when trying to negotiate prices and closing costs.
Since the group that lent the money for a mortgage has a high investment in the property still, they may be more likely to play ball with a buyer who is interested in the property than a typical homeowner would be when trying to sell their home. This means that, even though an REO is likely already listed at a significantly lessened price, it is probable that negotiations can convince a lender to lower the price even more. That would take a home from what would already be considered a steal of a deal to a rock bottom price, meaning great potential for the new buyer.
Each bank or lender has different rules regarding who can sign off on someone buying a foreclosure. Because of this, potential buyers may feel they are getting the run around when conversing with the institution, but sticking it out can mean getting a sweet deal on a property that otherwise could have been quite expensive.
Some banks may list a property for less than they asked at auction due to a lack of buyers during the auction. It’s possible, therefore, to snag a really great deal where it may not have been as low a price just a short time earlier. If the previous owner had taken out several loans on a property, but only filed for foreclosure through the main mortgage, it’s possible that the other lenders may be taken out in the foreclosure, therefore the home will be less money for the new buyer, and sometimes it can be quite a chunk. This can mean saving a lot of money in the long run on the home, so it is a great potential perk for those looking to buy a real estate owned property.
Where there are positives to buying bank owned homes, there are also negatives. Frequently, these homes have been sitting empty for a while, sometimes even years, so they can be quite overgrown in the yard area as well as potential problems with any vines that may have attached to the sides of the home. If there were any structural problems that hadn’t been fixed by previous owners due to a lack of funds or interest in maintaining the property, they have likely been compounding over the time the home spent empty as well. This means that any pipes that may have been leaking have likely continued to leak, and possibly have gotten worse over time. Roofing may have fallen into disrepair, and other such problems could begin cropping up shortly after a new homeowner moves into the property. Additionally, some homes may have attracted living creatures of all sizes- from insects to rodents to vagrants. All of these problems can be remedied, but it’s something to be aware of prior to purchasing an REO.
Some bank owned properties are available to view before purchase which differs from homes that are up for auction. Because many bank owned homes were previously at auction, it may be worth the time to attend the auction of homes that seem to be potential purchases in the event that the home does not sell. This can give the buyer insight into how much the home was not able to sell for, as well as possible information that the bank may provide during the auction, although most auctions are sight unseen purchases with very little info available before the auction finishes.
Auctions are a way to purchase bank owned homes, as mentioned already, but it’s not always the best way to buy. Some homes have attracted the interest of many investors, including companies that flip homes. This means that they may send scouts to intimidate other potential buyers as well as to run up the final cost of the property. For homes that have tenants currently living in the property, they may not comply with the new buyer’s insistence that they vacate the property which can turn into a somewhat sticky situation, especially if they decide to destroy parts of the home on their way out which is not an uncommon occurrence. Regardless of the state of a home, however, many people purchase real estate owned properties and love the home they have purchased. Some people buy homes with the intent to remodel and a home that has gone through a rough foreclosure may be the right price for them to have a hefty remodel budget that can turn the home into a dream. Others may find that there are few things wrong with the property and they enjoy spending time in a home that they paid less for than they would have otherwise. No matter the situation, there are people who find that buying a bank owned home is the best choice for them, so it’s worth checking out if it works with your plans!