Bank Own Properties

Banks are not in the business to hold an inventory of homes. They want to get rid of these homes yesterday. This presents a great opportunity for first time home buyers and investors because most of these homes are around 20% below market. Once the bank own the property they will handle eviction if any, some repairs, pay past HOA and/or other maintenance dues, and negotiate with the IRS removal of tax liens if any.

How do banks sell REOs?

REO stand for Real Estate Owned by the Bank. Banks normally have an REO department that handle this. They would like to get the best price of course. When you make an offer, banks usually will counter-offer. Don’t be surprised to get a higher counter-offer than you expect. Banks want to show their shareholders and investors that they are trying to get the highest possible price for the house. You should counter the counter-offer. Your offer will likely be reviewed by an approval panel. Even after they accept your offer they may include wordings like “subject to corporate approval”.

Condition of the Property

These homes are almost always sold “as is” with right to inspect. You incur the inspection expenses (termite, general home inspection, mold, etc). An inspection contingency period must be included in your offer that will allow you to terminate the sale if any of the inspection reveal damages that the bank will NOT correct.

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