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Top 4 Reasons to Buy a Bank-Owned Property

November 5th, 2014 7:42 AM by Jackie A. Graves, President

Bank owned property for sale sign

If you’re in the market for a good deal on a home, you may have heard about bank-owned properties being sold at discounted rates.

Before you make an offer for one, you should know what they are.

In the pre-foreclosure stage, homeowners have defaulted on their mortgage loan but have an opportunity to pay up and stay put. Failure to pay leads to the auction stage, wherein the bank forecloses the property and auctions it to the highest bidder.

Finally, homes not sold at auction officially become bank-owned properties—also known as real estate owned properties (REOs).

Advantages of Buying a Bank-Owned Property

For some home buyers, these properties are a great fit. Here are four reasons why.

1. No Homeowners: Deal Directly With the Bank

When you buy bank-owned property, you only deal with the bank. Some home buyers may prefer to not deal with homeowners. REO properties often are vacant, so home buyers don’t have to deal with tenants reluctant to leave, troubled homeowners or former owners threatening legal action.

Plus, the bank has no emotional attachment to the home, which means you don’t have to deal with a seller reluctant to negotiate for sentimental reasons.

2. No Outstanding Taxes

Did the last homeowners stop paying their property taxes? That shouldn’t be a problem.

To entice buyers, the bank should waive any outstanding real estate property taxes due on the property. However, be on the safe side and do a title search.

3. Option for a Home Inspection

Unlike properties sold at foreclosure auctions, you can request to see and inspect bank-owned properties before you close on a deal. And you absolutely should.

REOs are typically distressed homes, and the former owners are not likely to have kept the place up to date or even move-in ready. Serious work may need to be done.

4. Discounted Prices

Probably the biggest reason that people first get interested in bank-owned properties is because of their below market value prices. But that doesn’t mean you are necessarily going to get a steal.

Homes that require too much repair work can quickly become just as expensive as—or even more expensive than—move-in ready, homeowner-sold properties. They’re not all diamonds in the rough.

Compare the bank’s asking price with other comparable homes in the area and be sure to get a thorough inspection.

Consider Professional Help to Buy a Bank-Owned Property

Bank-owned property negotiations usually go through an experienced REALTOR®, which means you will have a professional who specializes in foreclosures on hand to guide you through the process.

By: Angela Colley | Updated from an earlier version by Deena Weinberg.

To view the original article click here

Posted by Jackie A. Graves, President on November 5th, 2014 7:42 AM


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