You CAN Buy Bank-Owned Properties – Here’s How!
Posted by Lisa Udy on Wednesday, November 28th, 2012 at 11:40am.
Many would-be homebuyers are confused when it comes to
buying bank-owned properties and most of them give up – and pass up bargains –
before they actually give the process a chance.
But the process for buying these so-called REOs is not that complicated, although these are waters best treaded with the help of a licensed real estate agent by your side.
If you are looking for REOs to browse while home shopping, then contacting an agent who works in the same area that you want to live in should be your first step. An agent with local ties is one that will know about the REOs and other distressed properties that might interest you.
One reason that dealing with an agent is the way to go is that your agent will have up-to-date information about bank owned properties, so that you can act on it right away. Your agent can also initiate contact with the lender or bank that owns the property to express your interest. However, before you spend the time and effort (and the effort of your agent) on contacting the bank, you should be sure that you are fully ready to buy.
Most foreclosed properties that are ready for a buyer are listed on the MLS (multiple listing service). If the property that interests you is listed, then you can invariably contact the listing agent. If the property isn’t listed with a listing agent, then your agent can contact the bank that holds the property directly.
What the bank is looking for at this point is likely getting the property off its books. Once your agent gets into contact with the REO officer or asset manager who is handling the foreclosure, you can arrange to look at the home to be sure it is a property that you want to buy. At this point, if you want to proceed, and the bank agrees, you can start to negotiate the terms of the purchase. This is a step where you will definitely want a real estate agent working for you.
Keep in mind that in some states, you may have to wait for a period of time to pass that is known as the “redemption” period. It can be months or weeks, dependent upon which state you are in. This period of time allows the owner to get the property back if they pay the expenses that the bank has been out to foreclose on the property – and their payments that are in arrearage – paid up.
When this period is over, the bank will be focused on breaking even. The bank’s goal is to get as much of the money that they have been out on the property –back in their coffers. This means unpaid payments on the mortgage, expenses that it was out to foreclose, repairs, liens and so forth.
Your focus, of course, is to get the property for the least amount possible, minus the cost of making any repairs that the property needs. If you contact the bank right away and are prepared and ready with the money to buy – or you are qualified to purchase credit-wise, then the bank is often more than willing to work with you.
Keep in mind that a foreclosure is a non-performing asset to the bank that is holding it. They want you to buy it!
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