What Does It Mean If a Home Is Bank Owned?

Bank owned property is often classified as REO or real estate owned property.

If a homeowner does not make the mortgage payments, the house may be sold at a foreclosure auction. If the minimum bid is not received at the auction, ownership of the house reverts to the bank holding the mortgage.

Finding Bank Owned Homes

Banks may advertise lists of REO or bank owned homes on the Internet. Often banks contract with local real estate agents to sell the property.

House Occupancy

Prior to sale, banks usually evict the house tenants. The house will be vacant at the time of sale.

Condition of House

Banks may make repairs or perform general house maintenance before the sale. A thorough home inspection is necessary to identify the house condition prior to purchase.

Title

After the foreclosure process, all previous loans and liens are erased. The purchaser receives a title insurance policy for the home.

References

• Smart Money: Buying a Foreclosed Home
• Buying Bank Owned Properties (REO)
• MSN Money: The Safest Ways to Buy Foreclosures