Bank Owned Properties or REO (Real Estate Owned) Properties

There are real advantages to buying a home that has already been foreclosed on and is owned by a "bank".
  • They are "cheap", usually priced below assessment (sometimes by quite a bit), and offer a good value for the money
  • Because they are priced lower, there is an opportunity for the purchaser to gain equity more quickly
However, there are some guidelines and there are risks.
  • Most banks or investors want their money quickly and will want to close as soon as possible (under 4 weeks)
  • They will not accept an offer that is contingent on sale of the buyer's home
  • They will want a proof of funds letter submitted with the offer - they want to know that they are accepting the offer of a buyer that can really purchase the property
  • Most likey, the property will be sole "as-is" and the bank will have their own addendum stating this in many ways.  Buyers are encouraged to have an inspection and, if there are significant problems, that "could" be used to void the contract.