Bank Owned Properties

By
Real Estate Agent with The Michael Bean Group, LLC

 

 

Bank owned properties are also referred to as REO's, or Real Estate Owned and Foreclosure properties. When a property is owned by the bank, or Mortgage Company it is known as an REO. There is a long process to getting these REO's from the auction to the marketing platform. Many times the Mortgage/ Banks will hire a REALTOR to handle all of the pre-marketing details. Some of these details are cash for keys (C4K), eviction, trash out (cleaning), and opinion of value. Typically the agent is given a short amount of time for each detail of the pre-marketing.

 

Once on the market, there is as much information as possible on the Multiple Listing Sheet for the property as possible. As the banks that own these properties have never lived, or seen the properties, there are little to no disclosures. Buyers must take care to determine the need for building, septic and well inspectors. Sometimes these properties are left in deplorable condition. I have seen frozen plumbing, holes in walls, carpeting ripped, or torn up, fire places in dangerous condition, and windows and doors either missing or broken. Pricing strategy is usually based upon the condition of the structure. There are times that the water will be turned off and/ or heat. If there are frozen pipes, it will be impossible for the Bank to authorize the water/ heat to be turned on for inspection due to the possibility of additional damage. In these cases, the buyer's offer should reflect this.

 

Almost all of these REO's require a pre-approval from a lender and/or a certified bank check for a deposit if you plan to submit an offer. Once accepted the banks are typically requiring you to complete a 16-18 page addendum to the standard Purchase and sales agreement. This addendum stipulates and repeats many things that are in the standard P&S, but they do typically have a time sensitive closing date, meaning that if the buyer is unable to close by the date they have chosen, the bank may assess a daily penalty for each day past the original date. If you or your buyer is not familiar with or at all confused by the addendum, an attorney should review the document.  As far as clear Title to these properties go, almost always during the pre-marketing, the Bank holding the property has completed a Title search to ensure that there are no out-standing liens against the property. The last thing they want is for things to come up that would delay closing.

 

You may be asking, these are good deals, right? Yes they can be, with due diligence these can be excellent short-term investments. Your REALTOR will be able to help you gain access to these properties and guide you through the process for purchasing these properties.

Comments (3)

Associate Broker Falmouth MA Cape Cod Heath Coker
https://teamcoker.robertpaul.com - Falmouth, MA
Heath Coker Berkshire Hathaway HS Robert Paul Prop

Inspect, Inspect, Inspect.  When they take these homes in foreclosure, you have to inspect everything from building permits to the process they completed in the foreclosure.  Good deals are more than price.

Jun 19, 2008 12:50 AM
Anonymous
Frank Orlando

Heath is right, we had a foreclosure thet could not get a certificate of occupancy. Seems they failed the footings inspection.

Yours,
Frank & Jodi Orlando 
Get Us A Home Realty Inc & Atlanta Relocate 
Our Web Sites: www.GetUsAHome.com
                         www.AtlantaRelocate.com

Jun 19, 2008 12:55 AM
#2
Fred Griffin Florida Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

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