Bank Owned Properties
Bank owned properties refer to real estate which has been returned to the lender. Also referred to as real estate owned or REO, bank owned properties can consist of land, single dwelling homes, condominiums, apartment buildings, manufactured homes and commercial real estate.
Bank owned properties can be sold directly through the lender or a licensed realtor. Most REO property is priced under market value. In some cases, buyers can purchase bank owned real estate at savings of up to 40-percent. However, the average savings hovers between 10- and 15-percent
It is important to realize bank owned properties were previously foreclosure real estate that did not sell at auction. When lenders foreclose on real estate, the property must first be placed for sale through foreclosure auctions. If the property is not sold at auction, it is returned to the lender.
While it is true bank owned properties can be purchased at substantial savings, it is important to engage in due diligence prior to making an offer. A large percentage of bank owned homes have sat vacant for long periods of time. Some are the target of vandalism. Others were the target of the foreclosed homeowner.
An unfortunate phenomenon occurs when homeowners are evicted from their homes. Oftentimes, these disgruntled and stressed out people take out their frustrations on the house. They will remove appliances, tear up carpet, destroy bathroom fixtures, and punch holes in the drywall. In many cases, buyers will have to invest several thousand dollars to return the home to livable condition.
Bank owned properties are usually sold through the loss mitigation department of the lender holding the property. A loss mitigator is assigned to handle all transactions associated with the real estate. It is the job of the loss mitigator to obtain as much money as possible on the home. After all, banks are in business to make money.
When purchasing REO properties, be prepared to engage in multiple counter offers. It is rare for a loss mitigator to accept the first offer on the property unless the buyer offers the full asking price.
Real estate experts recommend seeking out bank owned properties which have been on the market for 60 days or longer. The longer a property is listed, the more room there is for negotiation.
Published on February 15, 2009 at 03:00 AM
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