Buying Bank Owned Properties: An Overview
Buying a Bank Owned Property means that you are buying a piece of property that has been reverted to the mortgage lender due to the fact that the owner was unable to make payments, and the house failed to sell during a foreclosure auction. Once a property is in the banks procession they will deal with any tax liens against the property, and handle any evictions that might be necessary. While buying a bank owned property is becoming increasingly more popular, there are a few things that prospective buyers should be aware of prior to being investing in one.
Protect Yourself by Having an Inspection Done
While buying bank owned properties is often considered a great way to save money, this is not always the case. Banks are in the money business, and they are not going to sell a house for an extremely low price unless it really does not have much of a market value. If you find a bank owned property that is listed astonishingly low there is a good chance that the house has been exposed to severe damage or is in a highly undesirable location.
While price tags can get your attention, it is important to remember that real estate is generally the largest, and most expensive financial investment that most people will make in their lifetime. By having either a home inspection or an appraisal done you will be able to know the state of the home, what needs to be done, and what the house is actually worth – prior to investing in anything.
Buying a Bank Owned Property is Generally Not a Fast Process
Buying a bank owned property is not like making a traditional real estate offer. In many cases, the offer that you make to the bank will need to be reviewed by a number of people and potentially companies, depending on the specifics of the situation. The bank needs to be able to prove to all parties involved that they have worked to make as much money back from the original fallout, by getting the best price possible for the property. In many cases, this means that the bank will counter back if they feel that your offer is just a little bit too low. Often once an agreement between the prospective buyer and the bank has been made, that agreement will be reliant on corporate approval – this can take anywhere from 5-10 business days.
Be Smart About Your Money
In order to purchase any sort of real estate, you need to be in at least a semi-decent place financially. Depending on your financial institution you might be able to get a loan that covers the full amount of the bank owned property, and in some cases, even a little bit more to help cover any extensive repairs that are needed. That said, this is not always the case, many lenders require at least a 10% down payment while others will require you to make adjustments to your already existing accounts and cards. Your best bet is to talk to your bank ahead of time regarding your budget, what you are looking for, and what you qualify for.