"Bank" owned properties

Real Estate Agent with Advantage Homes


There are several little known facts, that can become pit falls, to keep in mind when opting to purchase REO properties.

Many buyers believe that if a property is "bank owned" they will be able to "steal" it for nearly nothing.  Actually, these properties are handled responsibly by the asset managers and they are researched, comps are looked at, and they're sold "retail" for prices similar to the other homes in the neighborhood.   You might get lucky and find a "deal" though!

When one is ready to present an offer on a bank owned property, be prepared to prove you have the ability to purchase it up front.  The bank may even require a pre approval letter from a particular lander be included with an offer.  You may still choose your own lender, but you may have to be "approved" by the lender of their choice to even have your offer considered.  

Upon notification of  an accepted offer, you will, with out a doubt, receive an "Addendum" which can wipe out all of the terms and conditions that were in your offer including your time lines for discovery, inspections etc...You must pay close attention to the terms on the Addendum.

The Addendum also "assumes" removal of contingencies by specified dates.  They will automatically be released unless the institution has been informed otherwise before that date.  This means added risk of lost deposits.  Reasons do not matter!  If the buyer discovers the past owner has dumped concrete down the drain the day after the specified dates in the Addendum, the buyer only has 2 choices: lose their deposit (3% of the purchase price is normal) or buy the property anyway. Very Costly!

The rule of thumb here is "Buyer Beware" and Buyer Be Quick!!

I have seen several of these transactions come to completion and all was well.  A little harried, but well...I have also seen some near train wrecks.   So, be vigilant and be thorough!


Comments (13)

Dorene Shirley
The Mortgage & Property Connection - Campbell, CA
Silicon Valley Real Estate

Kim - Welcome to the Rain, make sure that you browse the site and become familiar with everything this site has to offer.  The more you browse the more you will learn.  I have found this site to be really helpful to me.  If you have any questions, please don't hesitate to email me, I will do whatever I can to help.


Mar 20, 2008 11:20 PM
Katie Graham
Cherry Creek Properties, LLC - Denver, CO
Denver Real Estate
Great information for buyers. Thanks for posting.
Mar 21, 2008 03:55 PM
Benjamin Clark
Homebuyer Representation, Inc. - Salt Lake City, UT
Buyer's Agent - Certified Negotiation Expert

Welcome to Active Rain! For some tips on how to get started here, check out my blog entry at ActiveRain Fast-Start Tips for Quick and Easy Points

Happy blogging and good luck!

Mar 21, 2008 05:01 PM
Keith Elliott Jr
KEIRE Realty Group - Manassas, VA
Principal Broker/Owner

Hello Kim,

Welcome to Active Rain and congrats on your first post! The opportunities to learn and network are incredible here. Best of luck to ya!


Mar 22, 2008 06:12 PM
Rick Sergison
EXP Realty of Canada Inc., Brokerage - Pickering, ON
Durham Region Real Estate Blog

I just stopped by to welcome you to Active Rain. I hope that you find it a great benefit to your business and that you see the value that I have also found here. I am from Charlottesville Virginia and using Active Rain has really increased my business!

My main blog on Active Rain is here: Charlottesville Real Estate Blog, not the link at the bottom of this post.

I hope you will look into the many groups as there are some great group both local and broad based,....


Mar 23, 2008 04:18 AM
Kay Van Kampen
RE/MAX Broker, RE/MAX - Springfield, MO
Realtor®, Springfield Mo Real Estate
Kim, welcome to Active Rain.  This is a great site to learn how to successfully blog and increase your website presence.  I would also like to invite you to join our group of RE/MAX Active Rain Bloggers.  Join in and happy blogging.
Mar 23, 2008 02:18 PM
Greg Knowles Santa Barbara Ca.
Fidelity National Title Group-Santa Barbara - Santa Barbara, CA

Kim, great first post. It was nice meeting you yesterday! Keep up the good work.


Apr 02, 2008 07:55 AM
Vickie McCartney
Maverick Realty - Owensboro, KY
Broker, Real Estate Agent Owensboro KY
Hello Kim, welcome to active rain.  I just wanted to pop bye and read your post and thank you for taking the time to read and comment on my post about my critically ill brother.  Thanks for the kind words and encouragement. 
Apr 04, 2008 04:10 AM
Ken Tracy
Coldwell Banker Residential - Naperville, IL
Helping clients buy and sell since 2005

Welcome aboard, Kim.  Thanks for reading.


Apr 07, 2008 08:27 AM
Chuck Willman UtahHomes.me
Utah Homes - Alpine, UT
New House Utah - Utah Hero Homes
This is aspect of real estate is best trod by those who are cool-headed and patient. There are a few bargains out there for those who are able to do the due diligence.
Apr 09, 2008 07:11 AM
Jeff&Grace Safrin
F.C.Tucker 1st Team Real Estate - Valparaiso, IN

Great informative post Kim - thanks for sharing and welcome to ar!



Apr 21, 2008 08:02 AM
Sondra Meyer:
EXP Realty, LLC - Corpus Christi, TX
See It. Experience It. Live It.


Welcome to AR!  I saw your comment on Hugh's blog about bitterness.  This blog is very informative and well written.  I look forward to reading more of your posts in the future. 

Grace and peace,  


Apr 22, 2008 02:06 PM