Why Now is a Good Time
to Buy a Bank-Owned Home?
First off: Banks are in the business to give loans to people; they are not set up to deal with the buying and selling of real estate.
Banks must go through a great deal of trouble to make sure that their properties are ready to sell. The property must be assessed for value, checked for potential problems, and a real estate agent must be assigned to manage the sale of the home. This process can take up to a year to complete. Banks are actually losing money while the properties wait to sell. In addition, the federal government can penalize the banks if they have too many REOs on their books.
For this reason, banks price the homes low so that they sell fast. Many times they are sold as-is to reduce the amount of effort the banks have to put into them. One might think it would be wise to fix them up and sell them at a higher price, but in most cases the time it takes to do this does not outweigh the cost. Exceptions to this rule might be if the bank feels that repairs are necessary to make the home safer, or if there are repairs of a very large nature that are needed. In very unusual cases, they might even put in some new carpet or put fresh paint on the walls. However, once these improvements are completed, negotiating repairs during the home sale is a rarity.
As with any other home sale, bank-owned homes can be inspected and walked through. This gives the buyer the opportunity to make an informed decision, and banks will be happy because they will be receiving serious offers.
REO properties tend to attract a lot of buyers since they sell at a discounted price. They are also attractive to investors, who can buy them at a low price, fix them up, and then “flip them” into a new home sale or a rental. In all cases, it makes the banks very happy to get them off their hands.