Understanding Bank Owned Listing

by Peter Vernon on Foreclosures

Bank owned properties are also known as real estate owned homes or REO homes which were not successfully sold at a foreclosure auction. When this happens, the property reverts to the bank’s or lender’s ownership. When properties fail to be sold off at an auction, they become part of a bank owned listing and join the bank’s assets inventory where the bank necessarily takes care of its mortgage, insurance, taxes and liens.

Getting A Bargain

Because of the high upkeeping costs that a bank has to shoulder while the property is in its inventory, it generally aims to sell such property as quickly as possible. To do this, the bank would normally make some repairs in the house to make attract potential buyers but banks do not really do this on every REO home. Their properties have adequate insurance and banks have a whole REO department which handles their REO inventory. They also usually turn to an agent to manage its bank owned listing. Many banks would, of course, rather sell their properties “as is” than to incur any expenses in repairing them but they are willing to certify that the house is pest-free.

If you are offered a house to buy, make use of the inspection period within which you can easily inspect and have access to the house in order to ascertain whether the house needs any repair or major reconstruction. Sometimes, the bank would agree to a price reduction or at least a credit for any repairs that you need to undertake when you buy the house.

Making An Offer

If you have an agent, tell him to contact the listing agent who works for the bank and see if there are important information that you need to know before you make any offer. If there are inspection reports already done on the house you are interested in, make sure that you have access to them. Also, it would be best if you know the extent of repairs that the bank will allow to be credited in your favor.

You can submit your papers through fax but make sure that you give the bank thee original documents. If you have any pre-approval letter, attach it to your offer along with your resume so the bank can see that you are financially responsible for your accounts. Try to remember all these things before you embark on a shopping spree from a bank owned listing so that you can seize the best opportunities in real estate investing.