Advantages of Bank-Owned Property
Bank-owned property refers to property that has gone through the foreclosure process and title to that property has been transferred to the bank that lent the money for the original purchase. Banks classify this property on its balance sheet as other real estate owned (OREO) once the title is transferred. Buyers can find great bargains relative to comparable properties that are on the market.
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Price and Motivation
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One advantage to buying a bank-owned property is that the price asked is usually less than comparable properties that are not owned by banks. Banks are typically anxious to remove property off its balance sheet. This increased motivation makes the bank more likely to negotiate with a buyer on price and the terms of the sale.
No Commissions
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Some banks don't utilize real estate brokers, so buyers can purchase bank-owned property without paying a sales commission. Although the seller pays the real estate brokers commission during a sale, the price asked usually incorporates a sales commission, thus increasing the price to the buyer.
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Inventory
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Many buyers are not aware that banks offer property for sale. Agile buyers can examine this inventory of bank-owned properties before it is made available to the general public through publication on multiple listing services. Since properties are added every day to bank-owned real estate, a buyer should check regularly for new inventory.
Websites
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Some banks have made its inventory of property available to the public over the Internet to facilitate the sale of properties. Three banks that have this inventory on their websites are Bank of America, JP Morgan and Citigroup, which list properties for sale in residential, commercial, multi-family and lots and land. A buyer can search by property type, price, state and many other criteria. The URLs are in the Reference section.
Auction Houses
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The financial crisis and recession have led to large increases in the amount of bank-owned property. Banks have contracted out sales of bank-owned property to licensed auction houses. Williams and Williams and JP King are two such auction houses (see References).
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