Can You Get A Deal? Buying A Bank-Owned Property

Whether they’re referred to as distressed properties, REO’s (real estate-owned) or foreclosures, bank-owned properties can be good deals. However, buying such a property is quite a bit different than buying a typical piece of real estate. Know what you’re getting into before you buy.

Here are a few tips for buying a bank-owned property:

Hire the right real estate agent. Since the process of buying a bank-owned property is different than buying a traditional seller-owned property, you’ll need to have the right real estate agent working on your behalf. You’ll want an agent who has extensive experience with bank-owned properties and knows the market and current homes values inside and out.

Make sure your financing is in order. The number one reason that sales of bank-owned properties fall through is financing problems. Once you hire your real estate agent, your next step should be to secure your financing. Talk to your lender ahead of time and make sure you get pre-approved for your loan.

The property may not be in the best condition. As is often the case with many bank-owned properties, the home you have your eye on may be in “as is” condition; most banks won’t make any improvements before offering it for sale. You’ll want to adjust your budget accordingly if you have to fix up the house if the sale goes through.

Be wary of bidding wars. Even if you think you’ve found a great deal, try not to get caught up in a bidding war with other potential buyers. Many bank-owned properties will have multiple bidders. Stick to your budget and don’t overbid. Also, keep this in mind: Just because a home is listed as a distressed property doesn’t necessarily mean that it’s a bargain.

Have your own home inspection done. Even if the property seems in good shape, you should definitely have your own home inspection done. The previous owners may have neglected the property prior to foreclosure or the house may have been vandalized or new problems may have cropped up following the bank’s ownership of the house.

Be ready to act fast, if needed. Many bank-owned properties aren’t on the market very long. In some cases, time on the market is measured in hours rather than days. Investors are starting to jump back into the market and bank-owned properties are hot commodities. Be ready to act fast and make a solid offer—your best offer—if a property you want comes on the market.

Buying a bank-owned property can be stressful, but if you bring your experienced real estate agent into the process and make sure you’re ready to buy at a moment’s notice, it can also be a very rewarding and money-saving opportunity. ∆