How to Buy Bank Owned Real Estate
Bank-owned real estate, otherwise known as REO (real estate owned), is property that went into foreclosure but did not sell at auction. That property then goes back to the bank or mortgage company that holds the mortgage. When buying a property owned by the bank, you will be negotiating with the bank rather than an individual, as the bank is the seller. It is important to do your due diligence when buying any real estate, especially a bank-owned property.
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Instructions
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Buying an REO
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Form a team when buying real estate. In this case, if you are looking at bank-owned property, find a Realtor who is experienced working with REOs. Next, find a loan consultant you trust to give you all of your lending options and a pre-approval letter that will be required when you submit the offer.
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Have your Realtor help you with a comparative market analysis once you locate a property you are interested in. Do not assume that because it is a bank-owned property it is being sold below the market value. The comparative market analysis will tell you how much similar homes in the area have sold for. Consider the condition of the property and repairs you will have to make when thinking about price.
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Make an offer once you have settled on a price. Include contingency periods in your offer for home inspections. The banks will typically sell the home "as is," meaning they will not do any repairs on the home before the sale is closed. Be sure to give yourself enough time to have the home inspected thoroughly. At minimum you will want a home inspection and a termite inspection. Do not be afraid to ask the bank to make repairs or give you a credit for repairs. The worst it can do is say no.
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Tips & Warnings
Don't be afraid to negotiate with the bank. You may receive a counteroffer to your original offer. Talk to your Realtor about countering the bank, either on price, terms or both.
