CHRISTIE WILKES
Cell: 801.891.4938
christie@mtnvalleyrealestate.com
 

 

 

Buying A Bank Owned Home

Buying Bank Owned Properties (REO)

You'™ve watched the late-night infomercials and you're ready to do the bank a favor and take a problem off their hands. Plus, you expect to make "a killing" in the process. Sounds great and it might just happen, but first you should take a look at some facts and get prepared.

An REO (Real Estate Owned) is a property that goes back to the mortgage company after an unsuccessful foreclosure auction. You see, most foreclosure auctions do not even result in bids. After all, if there was enough 

Since what is owed to the bank is almost always more than what the property is worth, very few foreclosure auctions result in a successful sale. Then the property "reverts" to the bank. It becomes an REO, or "real estate owned" property.

Banks always want to sell a property in "as is" condition. Most will provide a Section 1 pest certification, but not unless you include it in your offer and negotiate the point. They will allow you to get all the inspections you want (at your expense), but they may not agree to do any repairs.

Your offer should include an inspection contingency period that allows you to terminate the sale if the inspections reveal unanticipated damages that the bank will not correct.

Even though you agreed to as is," always give the bank another opportunity to make repairs or give you a credit after you'™ve completed your inspections. Sometimes they'™ll re-negotiate to save the transaction instead of putting the property back on the market, but don'™t take it for granted.

Banks do not want to see a lot of proprietary disclosures; they are exempt from the California Seller's Transfer Disclosure Statement (TDS-14). If there are real estate agents involved, either representing you or the bank, those agents are required to provide you their disclosure statements.

Most banks will not provide financing on their REOs but it doesn'™t hurt to ask. Especially if the property has extensive damage and you are purchasing it "as is."

Before making an offer, have your agent contact the the listing agent and ask the following:

Offers are usually FAXED to the bank. The listing agent needs your originals. There is no formal presentation. Keep in mind: nothing happens evenings and weekends (banks are closed)

Since there is no face-to-face presentation to the bank, provide the listing agent with a pre-qualification or better yet, a pre-approval letter and buyer biography. Make your offer easy to accept.

Hopefully these tips will manage your expectations. Remember that REO's sell at pretty close to full market value and are not the deals presented on late night television.

by Walt Harvey Walt and Arla Harvey are Realtors in Honolulu, Hawaii.