| Now that banks are having to repossess homes | | | | bank-owned property, but can also net the |
| from delinquent mortgagors, some buyers are | | | | greatest financial gain. Some estimates say |
| asking, "should I buy a bank owned property"? | | | | 25% off the original purchase price is |
| Even with years of real estate experience and | | | | common. If you want to play the auction game, |
| knowledge, the best answer here is still: "It | | | | you'll have to pay cash and you'll have to |
| depends." Shopping around and knowing the | | | | forego any kind of inspection. Auctioned |
| particulars of each sale are still vital as | | | | homes are truly "AS-IS." There is also no way |
| they can vary widely from one house to the | | | | to avoid the fact that you are profiting from |
| next. Arming yourself with some basic | | | | someone else's misfortune with this option. |
| information on these types of transactions | | | | People who are losing their homes may refuse |
| should also help to give you an idea of the | | | | to move out or may damage the property in |
| risks and potential gains involved. | | | | anger |
| | | | |
| SHOP AROUND | | | | SHORT SALE |
| | | | |
| Bank-owned or REO (real estate owned) | | | | This isn't really a foreclosure sale, but a |
| properties can vary in condition from damaged | | | | sale the homeowner makes in order to ward off |
| to excellent, and be priced properly (at | | | | foreclosure and do some damage control. Also |
| market) or be a great value. You just need to | | | | known as pre-foreclosure, this is when you |
| shop around. I have some clients that have | | | | buy from a homeowner before the bank |
| found absolute gems priced 10% to 20% below | | | | intervenes. You can inspect the house before |
| market. | | | | you buy when you go this route, but be warned |
| | | | - many of these deals are stalled or squashed |
| Even after you shop around though, there's | | | | by the banks before they're closed. |
| still a fair amount of risk involved in | | | | |
| buying this kind of property. Most of the | | | | REO |
| homes in this category are sold in "AS-IS" | | | | |
| condition. In some cases, you won't even be | | | | This is when you buy a foreclosure from a |
| able to inspect the house before you buy it. | | | | real estate company. REO presents the least |
| Banks won't make repairs or be held liable | | | | risk of all three options. You have clear |
| for damages, mold or the like so be prepared | | | | title, right to inspect and can get your |
| to sign lots of addendums exonerating them | | | | financing in line first. You won't get as |
| from any responsibility after the sale. Also | | | | great a deal as you could by buying at an |
| the bank tends to place a per diem clause | | | | auction but for many buyers, the reduced |
| that may cost you $100 per day if you're late | | | | headache is well worth it. |
| in closing. | | | | |
| | | | One thing I can say for certain: banks NEVER |
| If you're prepared to accept these | | | | want to own these REO properties, they just |
| conditions, I say "Make an offer" and see | | | | want to lend money and collect mortgage |
| what happens. Basically, there are three | | | | payments. When a property becomes bank owned, |
| types of foreclosure sales: | | | | it's because the borrower has forced the bank |
| | | | to foreclose, that is it. What this usually |
| AUCTION | | | | means for buyers is a clear chance to |
| | | | purchase a home from a very willing seller. |
| This is the riskiest way to purchase | | | | |