Buying Bank Owned - Foreclosure Properties

What Is A Bank Owned Property?

A listing that is noted as being a bank owned property is a property that has been through the foreclosure process.  The bank has obtained the property back through foreclosure from the owner.  The bank then hires an agent to sell the property for them.

What Are The Benefits of Purchasing A Bank Owned Property?

Bank owned properties are often times listed below market value for a quick sale.  When a bank gets a property back through foreclosure they are required to put aside a percentage of the properties value in reserves.  This takes away from the pool of money they can lend out.  The bank’s primary source of income comes from loaning money so they have a big incentive to sell the property quickly so they will have money to lend.

What Are The Drawbacks of Purchasing A Bank Owned Property?

When a lender sells a property they have gotten back through foreclosure they typically require the buyers to waive the Seller’s Real Property Disclosure.  This document is required by law of typical sellers so that any issues with the property can be disclosed up front.  In addition, most bank owned properties are sold in “as is” condition which means that the lender will not make any repairs indicated on the inspection reports.    The length of time the process takes to finalize an offer is often frustrating to buyers. 

How Is The Buying Process Affected?

When purchasing a bank owned property, the process is basically the same with one exception - getting an accepted offer.  Many banks use a third party asset manager to negotiate on their behalf.  Negotiations with the asset manager once the offer is submitted may be verbal.  When an agreement is reached the asset manager prepares a counter offer with the agreed upon terms.  This agreement is then sent to the lender for their final approval.  This process can take several days.  The lender may also require that you pre-qualify with them before considering your offer. 

If this type of property is of interest to you, please let me know so that I can provide more in-depth information.