Are bank-owned homes a good deal? Bank-Owned homes tend to sell less than the market for two main reasons, sellers want the homes to sell quickly, and the homes are sold as-is. Bank Owned homes can be a good deal but it all depends on the reason you are buying. A buyer who wants to buy a house to live in for a number of years will view houses differently than an investor.
Short term or Long Term home investment
An investor is trying to flip the property or rent it to create a return on their investment. To find the best deals investors look at the numbers, that is, what are they going to net from the deal. After figuring out all of the costs and potential revenue an investor will determine a return on their investment which is acceptable to them and then make an offer on a property. If the seller can’t meet the offer the investor will look for another home. One of the things experienced investors recommend is to stick to the numbers and not budge.
A buyer who wants to live in the home for a number of years might see a bank-owned property as a chance to customize a home to their own lifestyle. The money they save in the purchase price can be put into repairs and remodeling. A buyer may be thinking of the home as an investment but the pay off will be way down the road, unlike a traditional real estate investor who is looking for a return as quickly as possible.
How to Buy Bank-Owned Homes
Banks work through an Asset Manager to sell their bank-owned homes. They typically work with selected Real Estate Agents to sell the property. Asset Managers insist that buyers contact the listing agent, since it is the real estate agent’s job to sell the property. The listing agent’s job is to present all offers to the Asset Manager who reviews them and accepts the offer they like.
One might think the Asset Manager always chooses the highest offer but this isn’t always the case. Some banks prefer to sell to a homeowner instead of an investor, or they may prefer a buyer with pre-approved financing.
Bank Owned Home Success
Use an Experienced Buyer’s Agent. Any real estate agent can submit an offer for a buyer, but finding an experienced agent can ensure everything goes smoothly. They will know what paperwork is required and what banks demand; banks are very particular and follow specific guidelines for foreclosure sales. An experienced buyer’s agent will always be looking for deals to help their clients.
Let’s say you find a bank-owned home you think is a good deal but owning that property is another problem. Inspecting the property is crucial to determine any problems and as well as the benefits that will help you decide if the property is right for you. Your lender will require that you pay for a professional home inspection anyway. Some buyers will wave the inspection to make their offer more appealing to the seller/bank. This can be risky as hidden problems may arise which could reduce ones profits.
Financing is the main obstacle with bank-owned homes. Many bank-owned homes require cash to pay for the property. Proof of funds may be required for a bank to accept an offer.
Once an offer is accepted the bank has a wonderful amount of paperwork that needs to be filled out. An experienced real estate agent will make sure this goes smoothly.
The right bank-owned home can be a good deal if you know what your objectives are!