Issues With Buying a Bank Owned Home

Buying a bank owned home can be a great way to get your dream home at a much reduced price. And in the current economic environment there are plenty of deals in REO (real estate owned) property, to be sure. However, the reduced prices do come with a few extra issues that potential buyers must be aware of. Namely, doing a property title search to find past-due taxes and other liens, thoroughly inspecting the property before purchasing, and learning how to negotiate with banks for a better deal. This article will help you address some of these concerns:

Property Taxes and Other Liens

Foreclosures and REO’s are notorious for having liens. Liens are claims placed on the property for outstanding debts. If you purchase a property, you’re also purchasing any and all liens that may be outstanding. All liens must be recorded on the public records and will should show on a through title search. It goes without saying that a thorough title search must be preformed on all REO/bank owned properties before purchasing.

Getting a Better Deal

Banks are NOT in the business of owning homes. They are looking to get rid of their foreclosures as quickly and effectively as they possibly can. So, by definition, you’re dealing with a fairly motivated seller when purchasing a bank owned home. This doesn’t mean they’ll take “anything” for the property, and they do know what it’s worth, but there is often some wiggle-room to be gained in your offer. Don’t be afraid to place an offer quite a bit below the asking price, you may be surprised to find your offer accepted.

The Property’s Condition

Many foreclosed properties are in poor condition. With the previous homeowner losing their home, there’s a good chance they didn’t care about, or could not afford, to maintain the home’s state. Additionally, the bank isn’t in the business of making repairs and maintenance on their properties, so it is easy to see why this could be the case. A very thorough inspection of the property is imperative with any home purchase, but much more so on properties that are in foreclosure or owned by a bank.

Of course, there are many issues surrounding the purchase of a home and this barely scratches the surface. It’s important to find a qualified real estate agent who will be able to answer all your questions about buying bank owned REO homes.

Issues With Buying a Bank Owned Home