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