Why buy Bank owned properties?
Banks are not in the business of maintaining an inventory of houses. They want to get rid of the houses as soon as possible.
This is a great opportunity for first-time buyers and investors because most of these homes are priced about 20% below market.
Once the bank owns the property, it will take care of eviction if necessary, repairs, pay old fees and/or other maintenance costs and negotiate with the IRS the removal of any tax ties if necessary.
How banks sell REO's?
- REO is Real Estate Owned by the Bank.
- Banks normally have a REO department that takes care of this. Of course, they would like to get the best price.
- When you make an offer, the banks will usually make a counter-proposal. Don't be surprised if you get a bigger counterproposal than you expect.
- Banks want to show their shareholders and investors that they are looking to get the best possible price for the house.
- You have to fight the counter-proposal. Your offer will likely be reviewed by an approval board.
- Even after they accept your offer, they may include words like "subject to corporate approval.
Property status
These houses are almost always sold "as is" with a right to inspect. You incur the inspection fees (termites, general inspection, mold, etc.).
A possible inspection period must be included in your offer that will allow you to stop the sale if the inspection reveals damage that the bank will not correct.