Whether you are the Buyer, the Agent, or the Loan Officer/Lender for the Buyer of a bank-owned property, just be careful that the bank you are buying the property from can actually SELL the property to you.  Bank-owned homes are uber-good deals and even steals in some cases.  What can you do to protect yourself and (try to) ensure that the property can convey to you? 

When a Buyer enters into a contract to purchase a bank-owned home, also called an R.E.O. (Real Estate Owned), they believe that the bank has the right to sell the property to them and most of the time that is true.  But what if you are in the middle of a transaction with a bank and are not one of the "lucky ones" and you find out at the last minute that there are clouds on the title for the property?

Here are some things you can do:

1.  Request (nicely) that the title company (or in most cases, the attorney handling the transaction) checks the title on a weekly basis up until the closing.  They will NOT want to do this but it could mean the difference to you of owning the property in a timely manner or not. 

2.  See if there is the proper Power of Attorney for real estate already generated and signed to convey the property.  For example, with all the issues with banks, takeovers, etc. your bank today may not be able to sell the property if they merge/get taken over by another bank, so MORE DELAYS could occur.  For example, if the property is Wachovia-owned, Wells Fargo is going to own them (or maybe already does own them?) which will cause delays.  So, see if the listing agent, title company, attorney (or whoever) has a Power of Attorney to sell the property. 

3.  Have an attorney review your offer, the final contract, the chain of title, etc.  And, yes, it WILL cost you money but typically, it's just a few hundred dollars.  I know most real estate agents will cringe when I suggest this but we have to do what is in the best interest of our customer, so just bite the bullet and if they want yet another attorney involved, then fine and just understand that more delays are likely to occur.  :) 

Can you think of any other ways to protect yourself or your customer/client?  Thank you in advance for your comments. 

Happy Hunting for Great Deals!

** DISCLAIMER:  The information contained above is not meant to be construed as legal, financial, or tax advice, so do not take it as such. 

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--Lisa Spalding

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